The following is a scenario about a typical Moving Average Spring Strategy scenario as it plays out.
The EUR/USD currency pair, on the H4 time-frame, was in an upward path until 7th of June when a higher top was recorded at 1.13478. Supply pressure overwhelmed the demand in the market as sellers started to find the price attractive, causing the upward momentum to be disrupted.
After the higher top at 1.13478, the price made one more lower top and then broke below the 15 and 34 Simple Moving Averages, with the Momentum Oscillator also breaking the zero baseline. This suggested that a possible technical reversal might be in progress.
A critical support level formed when a lower bottom was recorded at 1.12816 on the 12th of June. Buyers tried to push the market higher for a while and a resistance level was registered at 1.13041 on the 13th of June when supply overcome demand once again. The possible reversal was further strengthened when the crossing of the 15 and 34 Simple Moving Averages, called a Death Cross, occurred.
A break through the critical support level at 1.12816 would then signal a short position and three possible price targets was projected from there. Attaching the Fibonacci tool to the lower bottom at 1.12816 and dragging it to the top of the last pullback at 1.13041, the following targets was calculated. The first target was anticipated at 1.12677 (161 %). The second price target was predicted at 1.12452 (261.8%) and the third and final target was expected at 1.12088 (423.6%).
If the top at 1.13041 was broken, the possible scenario would have been invalidated and needed to be re-evaluated.
On the 13th of June the EUR/USD currency pair broke through the critical support level at 1.12816. One day later on the 14th of June the market swooped down and in two large bearish candles took out the first, second and third target levels. Usually the market moves in slower waves but now and then such moves do occur, though it is not predictable.
Since all the profit targets has been achieved, we now remain patient but can look for early stages of a new trend in either other time frames or currency pairs.
The EUR/USD currency pair, on the H4 time-frame, was in an upward path until 7th of June when a higher top was recorded at 1.13478. Supply pressure overwhelmed the demand in the market as sellers started to find the price attractive, causing the upward momentum to be disrupted.
After the higher top at 1.13478, the price made one more lower top and then broke below the 15 and 34 Simple Moving Averages, with the Momentum Oscillator also breaking the zero baseline. This suggested that a possible technical reversal might be in progress.
A critical support level formed when a lower bottom was recorded at 1.12816 on the 12th of June. Buyers tried to push the market higher for a while and a resistance level was registered at 1.13041 on the 13th of June when supply overcome demand once again. The possible reversal was further strengthened when the crossing of the 15 and 34 Simple Moving Averages, called a Death Cross, occurred.
A break through the critical support level at 1.12816 would then signal a short position and three possible price targets was projected from there. Attaching the Fibonacci tool to the lower bottom at 1.12816 and dragging it to the top of the last pullback at 1.13041, the following targets was calculated. The first target was anticipated at 1.12677 (161 %). The second price target was predicted at 1.12452 (261.8%) and the third and final target was expected at 1.12088 (423.6%).
If the top at 1.13041 was broken, the possible scenario would have been invalidated and needed to be re-evaluated.
On the 13th of June the EUR/USD currency pair broke through the critical support level at 1.12816. One day later on the 14th of June the market swooped down and in two large bearish candles took out the first, second and third target levels. Usually the market moves in slower waves but now and then such moves do occur, though it is not predictable.
Since all the profit targets has been achieved, we now remain patient but can look for early stages of a new trend in either other time frames or currency pairs.