The GBPUSD has been moving in a narrow range since closing above 1.3445 on September 15th. The break came on the back of an impressive 800 pip rally from the August low at 1.2773.
Two weekends ago I pointed out the trend line that extends from the 2014 high. This area, which at the time was located between 1.3600 and 1.3650, was expected to attract sellers if tested as resistance.
Last week’s price action challenged this area on several occasions. The most prominent being the September 20th intraday rally that found heavy selling pressure above the 1.3600 handle.
However, the idea of going short was ill-advised given the 1.3445 support level combined with the recent uptrend. The 1.3445 area is the September 2016 high. It also capped several advances in June and July of last year following the post-Brexit selloff.
In the most recent weekly forecast, I mentioned that a close below 1.3445 or above 1.3600 could trigger the next move. So far, it appears sellers are eager to drive the price back below the 1.3445 region.
That said, without the daily close at 5 pm EST, we don’t have the confirmation needed to act.
Furthermore, Janet Yellen is scheduled to speak in the next few hours at 12:45 pm EST. Some of her speeches are more market moving than others, but patience is in order nonetheless.
A daily close (5 pm EST) below 1.3445 would expose the next key support at 1.3250. This is the early August high and is also very near the 23.6% Fibonacci retracement when measuring the current 2017 range.
Alternatively, a daily close back above 1.3445 would keep last week’s range intact. It would also maintain the pressure on the trend line that extends from the 2014 high at 1.7191.
Want to learn how I trade price action? Watch the Free Webinar