With election looming, why not sit near neutral levels
The UK election is just around the corner and today the country is celebrating the 1st of a couple May bank holidays (and the birth of Kate and William's baby girl). So the 85 pip range for day is a bit light vs the 22 day average of 151 pips.
On Friday we saw the price tumble and move below the 100 day MA (blue line in the chart above). It also fell back below trend line support on the daily chart (Bearish). The breaks stalled, however, as the move for the day was already extended and traders were anxious to head into the weekend.
Today the price ventured a short distance above the key MA level on a correction, but most of the time was still spent below the key MA level (see horizontal blue line on the hourly chart at the 1.51592 level). ON the downside the momentum has been somewhat limited. The 1.5105 area is a mini-floor area from April 23rd and April 27th. The price fell below the level for a few hours in European morning trading but rebounded as NY traders entered (the low reached 1.5089).
Going forward, with the election on the horizon, it would make sense to hang around the 100 day MA - it is a nice neutral level after all. From there the market can decide bullish above or bearish below as the cards fall. Remember, there is the US employment on Friday too.
Having said that, the bias remains more bearish below the 100 day MA currently and there is another neutral area below that the market might wander towards. Traders who are short would be more comfortable on a move back below the 1.5105 level. Stay below and there could ultimately be an extension down toward the 1.50329 (50% of the move up from the April 13 low). This too is a nice neutral level that might set the range before the votes are tallied.
