The GBPUSD is trading in a tight range from top to bottom ahead of the FOMC decision later today. The range is only 32 pips. This is well below the average of 75 pips over the past 22 trading days (the range is 42% of what is normal).
The high price extended to 1.3522. This took the price into a swing zone between 1.35213 and 1.35287. Near the top of this swing zone is the 100 hourly moving average down at 1.3529 and the 100 day moving average at 1.3530.
The convergence of these three levels helps put a lid on the pair ahead of the FOMC (at least for now).
This will also help define a key bias/risk level for – and through – the FOMC decision. Stay below and sellers will have more control. Move above and these sellers could easily turn to buyers.
Traders like to have a level/area that is technically important and gives a clear picture of bias – especially through a key event/exit. The 1.3521 to 1.3530 will be that area today per FOMC decision.
On the downside today, the low price stalled near 1.3489. Since January 6, the 1.3489 to 1.34988 area has been home to swing lows and highs (see red numbered circles).
A move below would increase the bearish bias and cause traders to look towards the 50% midpoint of the upside from the December 20th low at 1.34603.
What does the daily chart say?
Looking more broadly at the daily chart below, January’s price rally took the price to – and through – the 200-day moving average on two separate days. The price also broke above the 50% retracement of the decline from the June 2021 high. Both of these breaks failed.
Failing above these key technical levels turned buyers into sellers, with price then moving back below a broken trendline and the 100-day moving average (increasing control of the sellers).
Sellers therefore assumed more control.
Getting back above the 100-day MA, the broken trendline and the 38.2% range from the June 2021 high at 1.35754 would all be needed to shift the focus in favor of the buyers. In the absence of this, the downside is favored as the sellers retain control. Keep these levels in mind through today’s FOMC decision and in the future.