Tests March high but comes right off. Test intraday correction area.
As NA traders entered for the day, the GBPUSD tested the March 2016 high at 1.45135 level (high reached 1.4518). The price has backed off and trades back below the 1.4500 level (at 1.4472).
Despite the pullback, the pair has moved away from the 100 day MA at the 1.4426 level. If you recall on Friday, the price for this pair, triggered stops above the MA level (after testing it on Thursday), only to have the price tumble after the quick spike (it fell 80 pips over an hours time period). There is a pattern of quick retracements lately after hitting levels. The pairs move back down from the March high in the current hour bar seems to be another such move and fall.
In any case, the pair has pushed away from the 100 day MA at the 1.4426 level. A close above today will be the first close above since September 18, 2015 - 7 plus months ago. So it is somewhat significant technically. Traders should now use the 100 day MA as a level to lean against on dips. Stay above bullish. Move below ....um bearish.
The next targets on the topside off the daily chart comes in against:
- The March 18 high at 1.4513 area.
- The high from Feb 10 at 1.4577
- The 38.2% of the move down from the June 2015 high comes in at 1.46339
- The Feb high comes in at 1.4667. There is a topside trend line that slashes down near that Feb high price (converging to it)
The high price for the year, occurred on the 1st trading day of the calendar year at the 1.4815 level - just an FYI on a day the key 100 day MA is broken. That target level is not out of the question if the bulls can remain in control. The commitment of traders report showed that short positions in the GBP increased to 55K from 51K in the prior week. So there is a speculative short out there that has the potential to get squeezed.
That is the bullish scenario.
However, as I type, the sellers keep on pushing the pair lower from the peak not too long ago. Looking at the hourly chart, the price just fell back below the 1.4474 level.. This level represents the underside of the broken trend line (broken on the run to the highs today). The 38.2% of the days range is also at that area as well (not shown). The 50% of the days range is at 1.4460. A move below that 50% level would be worrisome for longs (who already are not all that excited about a 40-50 point decline from the peak - the low just printed 1.4465). We have recent histories of runs back from where we started. So a move below that level would muddy the waters for the buyers today. They may throw in the towel.
With the low coming in at 1.4465 so far, the market will be looking for those dip buyers to come in right now, but they will also want to see 1.4474 taken back on the topside as well. Key corrective test for traders today.
