The tail is wagging the dogs today
See post from yesterday).
When that floor was broke, the GBPUSD raced higher (reaching 1.39718), while the EURUSD moved lower. They were moving in complete opposite directions..
When this happens I like to say that the tail – i.e. the EURGBP, is waggin’ the dog(s) -that is the EURUSD and the GBPUSD.
When this happens it can be tricky – especially when EURUSD goes down/GBPUSD goes higher. It does not seem right. You expect that those pair go in the same direction. They may go at different speeds on the directional moves higher or lower. That moves the EURGBP too. But when they diverge in direction vs the USD, that is where traders start to get frustrated (more).
However, looking at the EURGBP, you can understand the dynamics.
The 100 day MA (and 61.8% held support the prior 3 days (give or take a few pips). Earlier today, the level was broken twice only to correct higher. That correction higher stalled right at hte 100 hour MA and 50% retracement at 0.8878. That hold set the market up for the break. We are now trading at the day lows at 0.8831.
The trickiness in the market from the tail waggin the dog(s) does not go away. What we do know is the EURGBP and the 100 day MA/61.8% is a key level.
What happens in the EURUSD and the GBPUSD can….go anywhere.
For the GBPUSD, be true to the trend line and the 100 bar MA (green line in the chart below). A move below is more bearish. That area comes in at 1.3949-51 now.
For the EURUSD, the 100 hour MA/broken trend line at 1.2349 are levels to stay below now. That turned the technicals to the bearish side. Stay below is more bearish.
The problem is, the tail is the dominant today and that can mess with dogs. So be aware and keep an eye on the tail.