Original Article By Greg Michalowski
Source: InvestingLive.com – “EURUSD and GBPUSD fall to 200-hour MA and find buyers on the first look”
Rewritten and Expanded Version:
EUR/USD and GBP/USD Decline to 200-Hour Moving Average Levels and Attract Buying Interest
In recent currency trading, the EUR/USD and GBP/USD have both experienced downward pressure, falling toward their 200-hour moving average (MA) levels. However, technical traders have demonstrated a willingness to step in and buy at these key levels during the initial test. This development highlights the significance of the 200-hour MA from a technical analysis standpoint and may have implications for short-term price direction in these key forex pairs.
Technical levels play a critical role in modern foreign exchange market strategy. Traders around the globe pay close attention to moving averages as a way to identify potential support and resistance zones. The 200-hour MA, in particular, is a widely-watched technical indicator among intraday and short-term traders because of its ability to determine trends and define turning points.
Understanding the 200-Hour Moving Average
The 200-hour moving average represents the average closing price of a currency pair over the past 200 hourly trading sessions. This measure smooths out price fluctuations and provides context for trend direction:
– An ascending 200-hour MA typically signals an uptrend when prices are above it.
– A descending 200-hour MA signals a downtrend if prices remain below.
– When the price approaches the 200-hour MA from above, the level often acts as support.
– When approaching from below, the 200-hour MA often acts as resistance.
Now let’s take a closer look at EUR/USD and GBP/USD behavior as they approached their respective 200-hour moving averages.
EUR/USD Technical Outlook
The EUR/USD pair has seen a moderate slide, influenced by shifting interest rate expectations, economic data, and global risk sentiment. As the pair declined through the European trading session, it eventually approached the 200-hour moving average. According to the original analysis:
– The 200-hour MA for EUR/USD was located near 1.08159 at the time of reaction.
– Upon testing this level, buyers stepped in, causing a modest rebound from the lows.
This behavior indicates the MA is serving as an initial layer of downside protection, and technical traders are using it as a level to enter long positions.
Additional EUR/USD technical observations:
– The pair has been oscillating between the 100-hour and 200-hour moving averages in recent sessions.
– The high from last week stalled around 1.0890, indicating resistance near that zone.
– Below the 200-hour MA, the next key support comes in near 1.0790, representing the low on April 26.
– A break below the 200-hour MA would shift short-term bias back toward sellers, with increased downside risk.
Since the moving average remains upward sloping, this implies that the medium-term directional bias remains modestly bullish, provided the EUR/USD remains above that line.
GBP/USD Technical Outlook
Similar behavior was seen with the GBP/USD pair. After gaining throughout the earlier part of May, the Pound slid during the recent intraday session, reaching its 200-hour moving average as well:
– At the time of reaction, GBP/USD was testing the 200-hour MA around 1.25699.
– This level successfully held as support during the first test, as dip buyers emerged to push the price upward.
– The price action demonstrated respect for key technical thresholds, mirroring the EUR/USD behavior.
GBP/USD Important Levels:
– The 100-hour MA is currently hovering at approximately 1.2596.
– The 200-hour MA at 1.2569 is now seen as a near-term pivot point.
– Below the 200-hour MA, support can be found around 1.2530, which was the swing low registered in prior sessions.
– Resistance now remains at 1.
Read more on EUR/USD trading.