A death cross has been formed in EUR/USD price action as the spot extended losses beyond 1.0550 last week. EUR/USD has not seen this signal active since March, back then, a short in the pair had a run of about 300p over the course of the following month.
Looking back at the last five years, a back test of the cross 50><100 SMA strategy has seen the signal activate 16 times. The overall results are negative, but looking further into the details, I found that it has been the long signals that underperformed, shorts have historically done well.
Shorting the pair on this MA cross signal has delivered an average performance of 1.6%, a max win of 10.8% is on the books. However, I would be cautious on the recent bear rally as the pair is looking overextended, a fade of strenght is more attractive than entering short below 1.0600
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