GBP/USD Moves Through 1.600. What’s Left For Today?

The GBPUSD moved through the 1.6000 level despite slightly weaker than expected housing data overnight.  The monthly BBAs measure of  Loans for Home Purchases for April was released and it showed a total of 27,685 loans.  This was below the estimate of 28,000 but higher than the 26, 671 from last month.  Although the trend is higher since the November lows for the series indicating a bottom may be in place, the pace remains toward depressed levels (see chart below).

From a technical perspective the price remains above the 100 hour moving currently at the 1.5879 level. Yesterday the price dipped below the moving average for the first time since May 18th when it broke higher at 1.5196, but the momentum to the downside was not sustainable.    Ultimately a break of the moving average would be needed to turn the medium term bias to the downside.

From a shorter term perspective the price is showing signs of topping.  The price has dipped below both 100 and 200 bar moving averages on two separate occasions overnight.  The first dip could not be sustained prior to the economic data release and this ultimately led to the new move to the intraday high at the 1.6036 level.

The second dip is occurring currently. The 100 bar moving average is currently at 1.5981 with the slope of the average flattening out.  This can be used as a short term sale opportunity to see if momentum can be established by profit takers and new shorts on the downside.  A break back above the moving average would neutralize the move again.

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