As expected, the pair took on the top line Overnight. I traded the GBPUSD and got out at 1.5050 this morning before the choppiness set in. I'll be honest, I missed the fact yesterday that the top line of the channel was also very near the 38.2% Retracement line of the move from the weekly high to the weekly low. This line also happens to coincide with the 1.6100 mark that has played havoc with the pair after the big jump during the 5 AM EST hour. With that review complete let’s get on to what may happen in the next 36 hours.

The weakness at the 1.6100 line seems to be systemic, meaning that on the 5 minute chart, there were three pushes between 5:45 and 11:30 AM EST, price is now falling for a test of the lowest point during that time frame. With sellers entering at the mark so decisively and regularly it's hard to see it being overtaken at this time. We may have to wait for Asia for another test. That test comes on their Friday and on our Thursday night. In the last 10 weeks the Friday ATR(1) Average is over 22 points higher than on Monday, showing greater propensity for a bigger move on Friday, with an even split between those Monday’s that reversed the Friday action and those that continued it.

This leads me to the following trade ideas. A 177 (Friday 10 week ATR(1) Average) point break lower would require a break below 1.6000 which has held strong this week and last. A break lower may be tentative at best. On the other hand a 177 point break higher from here puts us back in the Range of our Magnet trade from earlier in the week, around 1.6250/75. I'll look to trade a break back below the Top channel line for a target of 1.6000 but don't like the payoff, so I'll keep risk very light. On the other side, an hourly close above 1.6100 will possibly have me hunting for 1.6200/50. Both of these setups of course will be subject to any news. US Advanced Retail sales are coming out tomorrow morning and may create some spill over into GBP weakness. SNB has stated that they are on guard against too much CHF strength so balance your trade with those competing thoughts.

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