The UK CPI inflation data was weak today but BOE Carney is on the wires downplaying the numbers. As a result the GBPUSD has found a short covering bid and trades nearer the highs over the last 5 1/2 trading days.
GBPUSD hourly chart shows the contained trading range.
Technically, the lows were made shortly after the inflation report and those lows tested the lows from Friday at the 1.50774 level. In the process, the pair fell below trend line support on the weekly chart at the 1.50927 level (see chart below). Yesterday, the low found support against the level and bounced (low 1.5097). Traders could not help selling on the weaker inflation today, but when the momentum could not continue, the price quickly rebounded above that level and shorts covered. Such is what can happen when the market consolidates (see blue box in the chart above).
Weekly GBPUSD chart
Can you love the GBPUSD given the slowing inflation trend? No, but can you hate it when it gets into the 1.5000 handle area? The market seems to be comfortable buying at those levels.
I guess I can say, if the pair is going to go higher from here, the risk can be defined against the 100 hour MA (at the 1.51245 level currently). The price has moved below this MA both yesterday and again today, but most of the activity is above that MA line. Having said that, the pair and the buyers still need to prove they can get and stay above the 1.5200 level which has acted as a ceiling. The 200 hour MA (green line in the hourly chart) at 1.5227 area, also needs to be breached. The pair last traded above this MA on December 31 for 8 or so hours. Prior to that you need to go back to mid December for a period with the price above that MA line.
Closer support should find buyers in the 1.5140-53 area (see 5 minute chart below).
Trading non trending markets is about being at the right place at the right time and being flexible. It requires patience. Picking your spots as you don’t really know if the market is going to remain consolidating or break and move away. Eventually, the market will move away. For today, the pair already had a chance to go lower and had the data to do it, but failed. The price has gone higher but found sellers against the highs for the day (see 5 minute below).
Do I love it. No. Do I hate it. It has come a long way. So if I am to buy or sell , it better be at a good price. Watch 1.5140. See if the price finds support against that level. The pair has already had a move lower and move higher. I would like to see some side to take control. Watch the level to see if buyers emerge. The pair remains underwraps but will the ties that bind be released?
GBPUSD should find support.