When the market trends, traders are better served to understand when the market shifts versus trying to pick a top or bottom depending on which way the market is moving.
For the GBPJPY, it has been trending over the last seven or so months. The price has been above its 100 day moving average since January.
Yes the market is overbought but trends are fast, directional, and tend to go farther than what traders expect. Anyone whose sold the GBPJPY in 2024 have not done very well.
So for traders looking for a top, it is not wise to try to pick a top, but to figure out where the bias turns from more polish to bearish in the shorter-term.
In this video take a look at the hourly chart specifically. Going back to mid June, the price has been trending higher and in doing so reacting to both the 100 and 200 hour moving averages. Today, the low prices bounced off of the 100-day moving average on three separate occasions.
Needless to say, it would take a move below the 100-day moving average – and staying below – to increase the bearish bias going forward. Absent that and the trend is your friend.
Be aware. Be prepared. This video prepares both the buyers and sellers to what would turn the bullish tide in the GBPJPY to the bearish tide – even if it is in the short term. That is a key way to trade the trends in the currency markets.
This article was written by Greg Michalowski at www.forexlive.com. Source