January 19, 2022

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GBPUSD tumbles to lowest level since January 18. Pair trends to the downside.

2 min read

Pair trends lower today after break.

The GBPUSD tried to move back above its 200 hour moving average for the second consecutive day in the Asian session (see green line in the chart below), only to fail for the second consecutive day (currently at 1.36989). That started a trend move to the downside which is still in process as the pair extends to new lows going back to January 18.

Pair trends lower today after break.

In addition to failing on the break above the 200 hour moving average, the price decline has since cracked below the:

  • 100 hour moving average at 1.36801, 
  • The low from yesterday at 1.36537, 
  • A pair of lows from September 20 and 21st at 1.36403 (see green numbered circles),
  • The low from September 22 at 1.36088, and 
  • The low from August 20 at 1.36016.  

Add the natural support level I.3600 and the GBPUSD price action has seen a number of support targets broken without much hesitation in the process. The last seven hourly bars have seen lower levels on each bar. 

Where does it stop?

Looking at the daily chart below, the price is approaching the January 18 swing low price at 1.35139. The low price for the day has reached 1.35299 so far. The low price for the year comes in on January 11 at 1.34498. Those are potential target levels that could give traders cause for pause.

GBPUSD on the hourly chart

Looking at the five minute chart, the trend move to the downside has seen the limited corrective moves. The last move took the price from 1.36153 to the low for the day at 1.35299.

The 38.2% to 50% retracement of that moved to the downside comes at 1.35625 to 1.35726. I like to use those corrective levels as benchmarks for the trend move. If the trend move can remain in place, staying below those corrective levels keeps the sellers firmly in control. Meanwhile, the buyers continue to feel the pressure of being on the wrong side of a trend move (to the downside in this case).  

Stay below is more bearish. 

Move above the retracement area, and the buyers are taking back the minimum of control. It may not mean the lows in place, but it potentially could slow the trend down and lead to more consolidative type trading.




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