The GBPJPY has been trending higer since mid-June. That move to the topside has been using the 100 and 200 hour MAs since mid-June as the roadmap or guiding light. When there were some dips below the 100 hour MA, either the 200 hour MA stalled the fall, or the break of the 100 hour MA was quickly reversed. What we learned is that traders used those MAs to help define the bias/direction, and that bias has been to the upside.
Anyone who has tried to sell because the price had gone too far, too fast, are likely underwater. Remember, trends are fast, directional and tend to go farther than what traders think. The GBPJPY has been trending. .
Having said that, the market has also been knocking on the 100-hour MA’s door the last three trading days. It looks like the move higher is tiring. A negative technical development today after bouncing off the 100-hour moving average, was that the high price fell short of the high price from yesterday’s trade.
Is momentum fading?
Traders looking to pick a top, could sell and use the high from yesterday as a stop with hopes the price moves below the 100-hour moving average at 205.878 as well – and stays below that MA level.
Alternatively, traders who want to sell a break, can look for the break of the 100-hour moving average at 205.878 to give the sell signal and then cross fingers for a run to the 200-hour MA (green line at 204.99). .
If the 200-hour MA can be broken, it opens the door for more selling/downside probing..
Of course, absent a break of the 100-day moving average in the new trading day, and the chances of a new high increase.
So although sellers are still trying to pick a top, the lower high today allows seller to lean against the high from yesterday. However, understand that it will also take a move below the 100-hour MA to give more confidence to the trade.
This article was written by Greg Michalowski at www.forexlive.com. Source