We can’t remember a time, in many years of trading, that the market has been so focused on 200-day moving averages. It seems like everyone has them up on their screens. It seems to have started with the breakdown in EUR/USD to the 200-dma, the subsequent stabilization and then the second leg lower. We have also seen fascinating interactions with AUD/USD and AUD crosses and the 200-dma.
At the moment, we are looking at EUR/GBP, which is flashing some very strong technical signals.
The 200-day moving average is in red and we can see that the market has now failed twice in efforts to close above the key level. The second key point is that we have now put in a double-top at 88.41 that targets 83.60. Finally, the double-top/200dma resistace comes in right at the bottom of old support from mid-November.
It all adds up to a brilliant show of convergence that has every technical trader pounding the sell button today. We have also added the RSI to show that it’s also flashing sell signals.
We can think of some fundamental reasons to stay out of this trade but we never fight the technical trend and in this trade, it’s very clear.