GBPUSD rose to test the 50% decline from the April 21 high yesterday, and broke above that level at 1.2622 at the start of today’s Asian session. The high price also extended above the May 4th high at 1.26373 en route to a daily high of 1.2666.
However, those breakouts were all erased with a decline that saw GPBUSD break below a swing zone low near 1.2600 on its way to the daily low at 1.2587 (see chart below). yellow area in the graph above).
This low has wedged comfortably ahead of the rising 100 hourly moving average (blue line in the chart above) currently at 1.25678. The price starts to rise again.
So there was a failed break up above the 50% midpoint and the May 5 high, as well as a failed break down below 1.2600, which had been the swing zone since the April 26.
What to do?
Choppy markets hovering around fairly key technical levels (like the 50% retracement and the swing zone) can be frustrating.
In the North American session, the price rebounded above the 50% level and the May 5 high at 1.26373 and is currently trading at 1.2639.
If the upside bias is to continue, staying above the 50% midpoint at 1.2622 is a near-term barometer. I know there was a breakout earlier, but given the bounce, buyers have another chance to build on the break and keep the price in the upper half of the range since April 21st.
Conversely, if the buy fails and price breaks back below the 50% retracement level, I would expect price to eventually cross 1.2600 and then look towards the 100 hourly rising moving average 1, 25678 for another key test of this moving average level.
Earlier this week on Wednesday, the price broke below the 100 hourly moving average but was unable to maintain momentum. The price moved back above this level and used it as support both on Wednesday and again on Thursday.