We spoke about this move the other day. Price was pushing up against trend line Resistance just as the 50 day moving average was hitting the same level. This combination exerted tremendous pressure against the GBP. If the GBP were to breach trend line Resistance and the 50 day moving average we would be sure to see substantial price action on the breakout. The next target GBP bulls will be watching closely is 100 MA and the Fibonacci 38.2% Retrace level, which was drawn from the high (the last time price was above the 100 day moving average) to recent lows. These key levels are sitting just south of 1.51. If the Pound is able to take that levels then expect an even bigger pop in price action on the breakout.
Yesterday was not a good day for the CAD. The CAD retested Resistance at 1.0180 on Monday and bounced off that level. Unfortunately for CAD bulls, price took out the 50 day MA and the 100 MA, and tested the 200 day MA, all in one day. More concerning for long CAD positions was the cross of the 50 MA above the 100 MA. This may be interpreted as the first warning signal that the CAD run is losing momentum and that it may go the way of the CHF. A faster moving average, the 50 MA, above a slower moving average, the 100 MA, suggest rising prices are ahead.
Once again there is major choppiness on this pair. However, yesterday’s price action provided us with a sustained drop below the 200 day MA. That of course generates a negative bias and coupled with the downward sloping 50 MA it may suggest prices will drop further. Additionally, important JPY Resistance sits just below .8975. A close below that level generates decent momentum for the JPY. However, bulls sense there is limited potential as we know the BOJ stepped in near 85 to prevent a run up in price. Although it is a long way up a close above 92.75 is the only thing to save the Greenback as volatility on this pair is so exaggerated it is rendering price action in between the major MA’s almost irrelevant.
Written by bforex.com