Moving averages can be used during trending and ranging time periods. If price had been moving ahead of the 50 day moving average or trading below the 200 day MA for a significant period of time and the major MA’s are aligned in order, then price action in generally said to be trending. However, when price is trading between the major MA’s and or the MA’s themselves are in no particular order price action is typically ranging.
USDCAD:
The CAD has been ranging for over 2 months. However, the first potential real show of weakness happened when the 50 MA crossed above the 200 MA (see blue arrow). Price has found near term Resistance at the 100 day moving average (see red arrow). Long range Support still sits at 1.0850 while near term Support at 1.0650. You can observe the extreme volatility on this pair as it searches for market direction in between the major MA’s. If the 100 MA crosses above the 200 MA it will almost certainly pull out the CAD bears, yet a solid close below the 100 MA could keep the bears at bay a little longer.
GBPUSD:
The GBP has been trending against the prevailing long term trend since the end of May as indicated by the trend lines. Even with that move in price we have yet to see the major MA cross, although the 50 and 100 MA’s have just began to slope upwards. Currently price is sitting on trend line Support. Assuming, however, price continues to trend higher, price action will target the 200 day MA at which point GBP bulls would like to see the 50 MA cross the 100 MA. If however, price falls through current trend line support it may retest the 100 MA at 1.50.
AUDUSD:
Volatility is trying to buck the trend as the MA’s alignment are consistent with a falling price environment, with the 200 MA over the 100 MA and 50 MA. Volatility pushed price action to test the 50 MA and it bounced lower. As the 50 MA moved lower price attempted to break above the 100 MA but has bounced lower again. However, the highs have been a little higher and the lows a little higher. It is possible that the next push maybe at the 200 day MA just north of .8950. A clean break above the 200 MA will provide nice support for the recently volatile AUD, though, an ability to do so may spawn more weakness in the long term prospects of a break out.
Written by bforex.com
