The 1.2765-74 is now support
The focus shifts to the US dollar after the weaker than expected data today. The price of the GBPUSD, which has been on a up and down ride in trading today, has seen the price move back above what was resistance between 1.2765 and 1.2774.
Looking at the 4-hour chart above, the 1.2765 is the 38.2% of the move down form the June high. The 1.2768-74 is home to a number of swing lows going back to the post snap election announcement back on April 18th. Last week after the surprise election results were being disseminated, the price did move back above that level in the volatility. However, later that area become a ceiling.
IN earlier trading today the price moved above the area but later retreated. The data pushed the price back above.
What now?
Stay above the support. That is the dividing line for bullish and bearish. The market spent most of time after the UK election below that ceiling. Today, the price is back above.
Now, the GBP still has it's problems. The post election story does not go away. As a result, there should be sellers on rallies. How high can the pair go?
- The 50% of the move down comes in at 1.28058. The price moved above that level but is now below. That is the closest target to get and stay above.
- The 1.2829 is the level where there were a couple of swing levels (see chart above).
- The 1.2946 has the 61.8% and is also near swing levels .
- The 100 hour MA at 1.28577 should also attract sellers.
Focus is on the dollar now and the data was not good. The Fed is ahead. What do they say? How do they react to the lower inflation? The lower growth?
The technical levels are in place to help guide the way. IN the GBPUSD, look for the buyers to defend the old floor/ceiling but on any additional rallies, to put up a fight against resistance levels as well. We are heading back into the meat of the trading that took place between the calling of the election and the election itself. As a result, there is a lot of levels and technical tools in the way.