200 hour MA stalls the decline, but will it hold
The US football season is approaching (Coach "Mike" got some ink in weekend press as his season begins. I get all my coaching tips from him ; )) and for us Americans, the field goal kicks through the goal posts can be the difference between winning and losing (of course they matter in the "other football" too ; ).
In trading, what I call trading between the Goal Posts is when the 100 and 200 bar MA are a distance apart and the market price ping pongs between them.
Well the GBPUSD - as noted earlier - had not had an hourly close below the 100 hour MA since August 10th and therefore a break should solicit more selling. Indeed that is what happened. But where is the next target?
The 200 hour MA becomes the next target (the green line in the chart above) and that is where the price stalled.
So the pair now trades "between the goal posts" as defined by the two moving average. What does it say? It says to me that the sellers were strong enough to push below the 100 hour MA, but they are not so sure about turning the trend move higher (from the low on August 7th), totally around to the bearish side.
A battle is going on.
The market can go either way from here. Traders who are fortunate enough to be short from above (perhaps on the break of the 100 hour MA or even the trend line or yellow area) are looking for the key 200 hour MA to be broken. That would open up the downside for further downside and should allow the managing of a stop down (if a target level is broken, it is time to lower the manage the stop down, right?) . If you are an intraday trader who squares up before the close, you might look to take profit or partial profit against the level. If you like being short, trader can use the 100 hour MA as your stop. A move back above the 100 hour MA should be bullish for the pair.
Traders looking for that dip to buy - after all the price marched higher in last weeks trading - will lean against the level with a stop below (risk is defined and limited).
The MAs cause the dilemma but if you understand the dynamics of the trade, we also know that eventually, the price will move away. That will come when the battle between buyers and sellers is resolved. A winner will be declared...The market has simply not figured it out yet.
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