ONLINE FOREX BROKER
2021-05-21 • Updated
MAs often serve as important support and resistance markers. How should traders use that? Let's see it in a couple of brief examples below.
In the H1 chart below, 200-MA serves as a support area for EUR/JPY which is testing it at 132.60. As you can see, the support at this level was formed by the previous lows on May 17 and 19, but now, it is reinforced by the presence of the 200-MA. How to trade that?
Primarily, 200-MA is an important psychological level here. Even without the corresponding previous lows on the chart, the 200-MA alone would be an important challenge for bears. Also, the 200-MA is a long-term MA, and normally, the more long-term the MAs, the more is its "power".
Therefore, first, traders should prepare for a likely scenario in which the 200-MA sends the price back into the upside. On the other hand, given the importance of the support of the 200-MA at 132.60, it's like a last stand of the well-guarded downside. If the 200-MA is crossed downwards, bears will then have the entire space below to drag the price pretty much where they please. In our case, it would be 132.00.
If MA is decisively crossed, the trend that pushed through may gain more power.
Careful with false breakouts - wait for the price to confirm the breakthrough!
Second most commond case is when an MA send the price into an opposite direction it was going in before. In other words, the price bounces from an MA.
On the H1 chart below, NZD/USD is on the rise. As you can see, it's challenging the resistance of the 200-MA and 100-MA at 0.7210 as it already crossed an important psychological resistnace of 0.72. Very likely, we are observing a peak of an upswing and a start of a new downtrend formation.
Therefore, if you spot reversal candlestick formations on other timeframes as well - the MAs are sending the price back downwards.
The Crypto market usually also has a rough time in September. Bitcoin lost 12.7% in September 2021, 17.4% in 2020, 17.5% in 2018, 21.4% in 2017 and 45.4% in 2015. The main cryptocurrency increased by 13.3% and 3.95% in 2016 and 2019, respectively.
US100 broke through the strong resistance trendline, following July's inflation numbers on Wednesday, which were less than analysts expected…
Powell wants a soft landing for inflation, as Greenspan did in 1994. But it looks like he will get a hard landing.
For those who may be unfamiliar with Price Action trading, the horizontal arrows represent areas where the market structure was broken. As you can see in the scenario above, price broke below the previous low at the two marked instances
Let's start off with a look at the Daily timeframe on Bitcoin. We currently see price reacting to the rally-base-rally demand zone between the 15,600 - 14,300 price area. Price also seems to have found support off the trendline support as marked in the image above. Interestingly, this means the overall bias on BTCUSD is Bullish.
Central Bank Digital Currencies (CBDCs) are virtual national money. The idea of creating such currencies came to the authorities after the success of cryptocurrencies, which also exist only in digital form.
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