Search ForexCrunch

eg mean reversion

Today I would like to talk about a  potential mean reversion situation on the EURGBP daily chart.

Price has accelerated away from it’s mean creating the classic price-to-mean gap. The fast moving bearish price action was contained by a support level – where price has stalled and churned to create a bullish body inside day.

If price breaks  out  higher in the London session – we could see a fast return back to the mean, and possibly even back to the major resistance above. But, to make that call, we will need to wait and see how price reacts if it does indeed sling shots back to the 10/20 EMA mean value area.