GBPUSD tests 200 day MA (and other resistance) and comes off

• gregmikefx
• January 25th, 2010

Overnight the GBPUSD tested the 200 day MA at the 1.6175 level today (high 1.6173).   This is a key level to hold and will continue to be watched to gauge the overall bearish bias for the GBPUSD.  The market will remained biased to the bearish side as long as rallies against this key level are held.

The market also reached upside resistance in the 1.6175 area where  the midpoint of the most recent trading range from the January low at 1.5895,  to the January high at 1.6456 comes in at 1.6176 (see hourly chart below).

Finally, the 1.6175 area had upside resistance on the shorter term 5 minute chart.  The resistance came in against the midpoint of the move down from Friday’s high to low range.  That range comes in at the 1.6179 level.

So overall, the market had ample reason to sell with low risk against the 1.6175-79 area.  The sellers came in and sold the pair back down to a low in early NY trade to 1.6139. Watch the 1.6125 support where the 200 bar MA on the 5 minute chart is found. If the level is broken, it would help confirm the downward bias and we should see further downside pressure for the pair with the 1.6109 area being the next trendline target support (5 minute chart).

If the support holds, look for the market to have a battle between the 1.6141 and the 1.6125 level where the respective 100 and 200 bar MA on the 5 minute chart is found.  The first level to give way should control the bias.

Tickers: GBPUSD

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