GBPUSD bouncing in early NY trade. Earnings help. Bernanke at 10AM eyed.
Overnight, the GBPUSD moved lower steadily, in a reversal type day to yesterdays move higher (see chart above) . Like yesterday, the GBPUSD followed the 100 bar moving average on the 5 minute chart – in this case down. There was one test early on when market tested the moving average, and used it to push lower. The UK Public Sector Borrowing figures, which came in better than expected, could not reverse the trend/sentiment.
The move lower retraced 61.8% of the move up from the low reached on Friday. That Fibonacci Retracement came in at the 1.6375 level. The low reached 1.6382 where buyers came in the market. The push back higher in early NY trade (on the back of some better earnings announcements from Merck/Caterpillar) has moved the pair back above the 100 hour moving average which is currently at the 1.6420 level. Additional support should come in at the 1.6410 level (50% of the move higher – see chart below)
A move back below these levels, would likely indicate the correction higher off the low was just that. If the prices can hold, the upside may continue, with 1.6448 followed by the 100 bar MA which is currently at the 1.6460 level and moving lower. Watch these levels.
Bernanke speaks at 10:00 AM on the economy on Capitol Hill. His comments are likely to cause some volatility in the market. He should speak to the bottoming of the economy with less need for liquidity stimulus. However, he is also likely to warn the bounce will be shallow. The Unemployment is continuing to weigh on the economy as full time and underemployed is upwards of 16%, and housing although more stable, still has a lot of inventory hangover.
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