The GBPUSD fell to a new day and week low of 1.21543. The move lower took out the low from yesterday at 1.2165. Going back further, the break also took the price below the swing low going back to May 22, 2020 at 1.21591.
However, momentum could not be sustained on those breaks, and the price has since moved back above those broken levels and currently trades at 1.2208.
Is the failure a reason to buy?
Yesterday, the May 22, 2020 low found the buyers. Today, the price moved higher in the Asian session and into the early European session before rotating back to the downside. Nevertheless, support buyers tried to hold above those levels only to give way.
That break should've led to increased selling momentum. However, it did not. As a result, traders can lean again, cross your fingers, and hope for a Friday corrective rally after the move lower this week.
On the topside, moving above the high for the day at 1.2231 followed by the 38.2% retracement of the move down from the Monday high at 1.22501 would give buyers some added comfort. The falling 100 hour moving average at 1.22767 and the 50% midpoint of the week's trading range just above that level at 1.22798 would also be indicative of a market that has bottomed and poised for more corrective probing.
Taking a look at the daily chart, also watch the 1.2260 to 1.22653 area. Those levels represent swing lows going back to the end of June 2020. Earlier this week, the price held support against those levels before giving way on Wednesday. Move back above would be a positive development for short-term traders in the GBPUSD. Below
Admittedly, if the failure is a bottom, the buyers are not out of the woods. They are simply trying to catch what has been a falling knife (See daily chart) with risk defined against some multi-year lows. If the price can't get above 1.2260-65. If the price can't get and stay above the 100 hour MA and 50% of the week's range, the buyers are not winning.
So keep that mindset in mind. This is just a shot. Shots miss too (as evidence of the failed break on the downside today).