No surprise. The 200 day MA is reached and runs into some profit taking today.
The 200 day MA has been a key target for the GBPUSD since the pair broke outside the 3 plus month trading range below the 1.3711 level. That break took place on Tuesday (see posts from earlier in the week here and here talking about the target). The 200 day MA comes in at 1.3531 today. The low reached 1.3537. Close enough.
With the key target reached, the price has rotated modestly higher. The price has moved back to, and above the close from yesterday at 1.3569. The current price is trading at 1.3578.
A level on the topside now from the daily would come at 1.36547. That was the swing high from September 2017. Above that the 1.3711 "box" breakout level remains a key level going forward. A move back into the "box" would something shorts would not want to see going forward.
Drilling to the hourly chart below, the low today - in addition to testing the 200 day MA at the day's lows - was also testing the lower trend line on the hourly chart around the same level (two key reasons to buy).
On the topside on that chart, a channel trend line comes in at 1.3625.
Above that the falling 100 hour MA currently comes in at 1.3671 (and moving lower). That level is also moving closer to the swing high on the daily at the 1.36547 level.
The price action today - combined with the technicals - suggest "the market" is content to keep the bearish bias in tact, but at the same time respecting the risk from the employment report tomorrow AND the 200 day MA level. As mentioned in prior posts, the 200 day MA has not been broken since April 18th - nearly 1 year ago. The first test tends to be a tough nut to crack on the fist look. That is what we have seen so far.
Does it mean the low is in place? No. A move below would be even more bearish. However with the key event risk tomorrow, there may be a breather period. The technical levels outlined - both higher and lower - should give traders pause.
Nevertheless, the break outside the red box at 1.3711 was still a key break and give the sellers more control until proven otherwise. We might have to wait until tomorrow at 8:30 AM ET though.
