Look for a close above the MA for more bullish potential
The GBPUSD is testing the 100 hour MA for the 3rd time today (blue line in the chart below). The price yesterday also tested that MA, only to fail quickly. We are currently trading above and below the level. The buyers need to take control if the move higher off the low support has stronger, bullish legs. The next upside target comes in at the 200 bar MA on the 4-hour and the 38.2% at the 1.2875 level. The high from yesterday at 1.2887 is another upside target for the pair.
Looking at the 4-hour chart below, the GBPUSD felll to a low of 1.27687 today. That level was right near lows going back to the post UK election announcement from back in mid -April (see red circles in the chart below). The area between 1.2768-74 is a key floor for traders in the GBPUSD now. Stay above is more bullish.
What would mess up the bullish move higher today?
- We are at a key area not only with the 100 hour MA at 1.2849 but also the close from yesterday at 1.2857. What gets lost in the rally higher today, is that the pair tumbled lower on the YouGov poll at the start of the day that speculated that UKs conservative party might lose the majority in parliament. We did bounce nicely off support, but we are still down on the day.
- If the price moves back below the 1.2811-1.2822. That is the 38.2-50% of the trend move higher. The 100 and 200 bar MA on the 5-minute chart are also in that range at 1.2819.
Summary: Buyers showed up at the floor (at the low). The surge higher is up testing that ubiquitous 100 hour MA and needs to make a break away. Also the close from yesterday is putting some pressure on the pair now at 1.2857. If this area can be broken, the 200 bar MA on the 4-hour and the 38.2% at 1.2875 will be another tough nut to crack. Look for willing sellers on the first test.
