Sellers pushing cable back down
The GBPUSD extended higher in Far East and early European trading, rising to the highest level since January 2, 2015.
Earlier, the move gathered upside momentum of the break of the 1.54845 level in the Asian session. This level was the low from December 23. In February, the highs could only extend up to the 1.54785 area (see yellow ceiling area in the chart above) until the break today.
Looking at the 5 minute chart below, the momentum on the break of the 1.54845 level can be seen on the way up. After the break, the price marched steadily higher but stalled at the 1.53373 level. The next major target on the topside was the 100 day MA (blue line in the chart above). That level comes in at 1.5582 today. Although the price got the closest to that MA line since August 13, 2014, it really did not get close enough for my liking. Sellers showed up well ahead of the MA line and th selling started (see 5 minute chart below).
If the 1.54845 was a ceiling going higher, it is assumed to be a support floor below. In the 5 minute chart below, you can also see the attempt to hold support on the way back down. However, the last half hour or so, has seen a push back below this old ceiling. Needless to say, that ceiling is back in effect. If the pair is to go back higher, a move above (and staying above) will be eyed. There is additional resistance at the 100 bar MA on the 5 minute chart at the 15496 now (blue line in the chart below).
Honestly, I am a little disappointed with the lack of follow through on the break higher today. It showed a lack of conviction from the buyers. As a result, I am a little more wary (i.e. distrusting). Getting and staying above the 1.5485 level will be a hurdle for buyers (deep down, I still think the 100 day MA needs to be tested). Also keep an eye on that the 100 bar moving average on the 5 minute chart. It comes near the 1.5500 level currently (at 1.5496). That might be another ceiling to contend with for the rest of the day. If those targets can be breached, all may be forgotten (and forgiven), but the buyers have to show they do like this pair by getting and staying above those levels.
