Head and shoulders or break of MA/retracement ahead

As outlined earlier, the GBPUSD has moved above trend line resistance on the daily chart, swing highs and above the 38.2% of the move down from June 2015. You can review that discussion by clicking here. What about the now? What is the intraday price action saying?

Well, the price has corrected off the highs over the last few hours. So let's focus on that correction by looking at the 5 minute chart.

What do I see?

  1. At the highs for the day, the topside trend line was broken and it failed. Could be a top.
  2. The lower trend line was broken. More bearish.
  3. The trend leg higher has seen a correction to the 38.2% of that trend leg higher at the 1.4684. Holding above that is good for the trend higher today /bulls
  4. The corrective low stalled at the last low intraday. Good for the trend higher today/bulls
  5. We do have lower lows in the last few hours and lower highs as well. Not so bullish

There is one more thing. The formation could be forming a head and shoulders pattern, whereby a break of the neckline should be more bearish.

SO the pictures says intraday, the buyers are losing some of the upside momentum (traders were taking profit on the failure and the break of lower trend line), but are still trying to keep in control by buying dips against the support.

What would cause that to change? A break of the 100 bar MA and the 38.2% retracement should weaken the longs a touch more with better support at the 1.4666 level. That comes from the daily chart mainly (revisit prior post).

Traders intraday are playing against the technical tools.