Trend line cuts across at 1.3148
The GBPUSD has steps lower and trend like trading today as concerns about Brexit weigh on the pound.
The pairs move to the downside has looked to test a lower trendline connecting the lows from September 1, September 2, and September 3. On Friday, the pair initially tested the line again (red circle 4) and broke below that trend line. The break failed however and support was reestablished at the old trendline (red circle 5).
Today, the line was again broken but momentum is slow below the level. That trend line currently comes in at 1.3148. Traders will be looking for a break below that level (and staying below that level) to give more downside trend momentum today. Failure to do that and we could see a bounce back although North American holiday trading could limit the moves.
On further weakness, the next target would come in at 1.31162. That is where lows from August 25 and August 26 are centered around.
Should support hold, the buyers would initially like to see the price move above 1.3185. Above that the natural resistance at 1.3200 followed by the broken 61.8% retracement 1.32166, would be targets.
Drilling to the 5 minute chart below, the pair’s initial corrective move stalled between the 38.2-50% of the move lower AND near the falling 100 bar MA (blue line in the chart below).
The current “leg lower” from 1.32377 to 1.3143, has as its 38.2-50% retracement the 1.31793 to 1.31903 area. The falling 100 bar MA is close to entering that area at 1.31918 currently (and moving lower). If the buyers are to take any control, they need to take the price above that area. Failure to do that, and the sellers are still firmly in control of the trend.