Yesterday in the afternoon we decided to sell EUR/GBP , as this pair was retracing higher. EUR/GBP has been quite bullish since early May, after ending the 2-month consolidation period. The Euro has turned bullish during this time, which has been keeping the uptrend going for this pair.

But, the upside momentum ended as soon as July started and we have seen a pullback lower since the beginning of this month. EUR/GBP retreated 200 pips down but the 200 SMA (grey) held well as support for the second time on the H4 chart and EUR/GBP bounced off that moving average.

The price bounced around 100 pips higher, but the climb stopped right at the 50 SMA (yellow), which used to be support before. So, the 50 SMA turned from support into resistance. The price also formed a doji below that moving average, which is a bearish reversing signal, while the pullback was complete, so we decided to open a sell forex signal below the 50 SMA. The price eventually reversed back down overnight, hitting our take profit target, so we cashed in on that trade.