EURGBP bounces off MA support. Races higher on poll results.
Would you rather be lucky or smart?
The EURGBP fell to MA support at the 100 hour MA level at 0.76094 (low reached 0.7611 - see prior post). I commented about the level in an earlier post on the EURUSD.
It is month end which can lead to bids on EURGBP. So be aware. It just dipped to the 100 hour MA at the 0.76087 (the low reached 0.7611). That level may be support to lean against which could be an influence on the EURUSD as a result.
Traders who leaned against the level saw the price move to a high of 0.7630. In profit. Risk is still a dip below the 100 hour MA line.
The price then dipped to 0.7621 before ripping higher to the a high of 0.7669 on the back of the recent Brexit poll (see post here).
Now... the traders who leaned against support, got a windfall. I am not sure any of them knew the results of the poll, or even that the poll results were being released.
What they did know is that the 100 hour MA was a support level where risk can be defined and limited. They TRUSTED the tool. They TRUSTED the level.
Lucky? You bet. But I like to call it Traders Luck.
If you define and limit your risk - maybe if you put a little fundamental thought in the mix (like month end EURGBP flows), you might get "lucky" with limited risk. Is there anything wrong with that luck. No. In fact it is smart.
We all rely on luck when we get these random pushes from out of the blue. The difference is, the risk was defined and limited when the trade originated and it remained there. If the poll went the other way, the stop below the 100 hour MA may have been triggered and traders would have lost a little. It did not happen.
Instead the reward happened slowly at first, then a bigger jackpot was hit when the random poll was announced. Maybe month end contributed as well. Who knows? Lucky. Traders lucky!
TRUST.
It all comes down to trust in your tools. Trust in your levels, and a little luck.
