Forex Trading: GBP/USD May Be Ready For A Continued Move Higher

The GBP/USD was propelled higher today (Friday) from the better than expected purchasing managers index for April (42.9 vs 40.0 exp and up from 39.5 last month).  New orders rose to 46.3 from 39.4.  Although up, the index remains below the 50 level which still indicates contraction. The index has now been below 50 for 12 straight months.  However, it is up from the of 34.5 low reached in November 2008.   The level today was the highest since August 2008.

The better news led the GBP/USD to transition from non-trending to trending in the GBP/USD (see chart above) in the intraday 5 minute chart.  The pair has started to consolidate and correct the range, allowing the moving averages (blue =100 bar MA, green =100 bar MA) to catch up after the sharp move higher.   The current 100 bar moving average on the 5 minute chart comes in at 1.4842. I would expect buyers against the level this morning.   The pair also approached the high from yesterday which came in at 1.4941 (high today 1.4932).  Markets tend to slow down before previous days high prices especially if the move toward the level is a large move as it was today (from a low of 1.4750 to 1.4930 area).

On the daily chart, the pair has now risen for 3 straight days after bottoming and bouncing off the 100 day MA on Tuesday.  The 100 day MA is at 1.4520 currently and flat.  However it could be bottoming and with the better economic data out of the UK, the pair may be ready for a continued move higher.  The high at 1.5068 looms above. This will be a level the pair will need to surpass to continue the longer term trend higher.

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