The GBPUSD is extending to the downside and now tests its key 200-day moving average of 1.2449 (see green line on the daily chart above). The price is also below its broken 38.2% retracement of the move down from the July high. The level comes in at 1.24585.
Going forward, moving below that moving average increases the bearish bias. So far buyers are leaning on the key test.
Just yesterday the price extended above its higher 100-day moving average (blue line on the chart above) at 1.25026 and closed above that level for the 1st time since August 31. The closing level yesterday was at 1.25364. However, momentum could not be sustained. In trading today the moving average was rebroken turning buyers to sellers.
Looking at the hourly chart, the initial low for the GBPUSD in the early European session did stall ahead of that key MA level as buyers leaned on the 1st test. However, the last few hours have seen a break and rotation to the downside. Of note, is that the 100-hour moving average was also broken on the run to the downside (see blue line at 1.24806 on the chart below). For intraday sellers, that level is now close resistance. On a break below the 200-day moving average the rising 200-hour moving average comes in at 1.24101 and would be the next major target. The low price from November 6 will also be a modest target at 1.24278.
Conversely, for buyers against the 200-day moving average (and so far that level is holding), those traders would want to see the price move back above that 100-hour moving average to give more confidence that the support at the 200-day moving average is solid.
This article was written by Greg Michalowski at www.forexlive.com. Source