Just two days ago I wrote an update about EURGBP and why I believed the bullish case was building. I closed that post with some thoughts on what I want to see next to confirm that this bull is leaving the station. Here’s what I said:
“But there are a couple things I’ll be keeping an eye out for to further confirm my bullish bias.
The first is a cross over of the 50 and 100-bar SMA’s. As you can see, the 50-bar SMA hasn’t been trading above the 100-bar in quite awhile. The next would be the 50-bar SMA crossing the 200. Finally, we’d like to see both the 50 and 100-bar SMA’s cross the 200-bar SMA.”
As a refresher, here’s a look at the 4-hour chart at that time:
And here’s a look at the 4-hour chart now:
What’s happened in the last two days
When we look at the current 4-hour chart, the two things we were looking for have or are about to happen.
First, price has traded through the 200-bar SMA already. And we’re starting to get comfy above that level. The 200-bar SMA currently sits at 0.8509, so we’re not that far above it. But the fact we’ve had a relatively easy time chipping away at it is a great sign.
The second factor is the imminent crossover of the 50/100-bar SMA’s. The 50-bar SMA is only 6 pips below the 100 right now, and it’s moving higher at about 3 pips per candle while the 100-bar SMA is moving higher by only 1 pip per candle. That means we’d expect a crossover in the next three bars, or twelve hours.
There aren’t twelve hours of trading left in the day though, so we’ll likely have to wait until next week to see this happen.
So what’s next?
The next thing we really want to see is the 50 and 100-bar SMA’s cross the 200-bar SMA. That would put the moving averages in a purely aligned formation to the upside and be a very strong indicator that we’re heading much higher.
I’m currently holding a decent long position in EURGBP and our stop lose is now in profit, so we’re likely going to just keep moving it further and further in profit as the pair moves higher.