Forex technical analysis: GBPUSD tests 200 hour MA
"Cabinet revolt" on Brexit as per The Telegraph
The GBPUSD has been moving lower in the first few hours of the Asian Pacific session.
There is an article in "The Telegraph" titled "Boris Johnson and Michael Gove lead cabinet revolt against Theresa May over fears she is forcing a soft Brexit". That may be contributing to the softness in the currency.
Technically, the pair has moved down to test the 200 hour moving average at 1.34022. The low just reached 1.34043 and we are seeing a modest bounce (trading at 1.3409 currently). A move below that level would be more bearish technically.
Yesterday the price did break below that MA level (*at 1.3393) and the 50% of the move up from the November 28th level at 1.33845. However, the next hourly bar, started to find support at its 50% level, and shorts were forced to cover. The high yesterday (after the low) could not extend to the 100 hour MA (blue line).
In the new day, the price has moved back below the 38.2% retracement (at 1.34234 - risk level for shorts now), on its way to the 200 hour MA line (green line). Can it break?
The pair is down about 35 pips from the close. So it is the biggest mover. However, a break below the MA support will be eyed for a more bearish bias. If broken, the 50% at 1.33845 will also need to be breached.
Risk for shorts? As mentioned above, if the sellers are making a play (on Brexit or turmoil or even just technically), The 38.2% at 1.34234 is close risk.