The month does not end until Monday, but we may be starting to see some month end flows
The month of May is coming to an end on Monday, but we may already be seen the ubiquitous “month end flows” enter the market.
What does that look like?
Moves that seem to be developing momentum, only to slow and reverse. In other words, in order might be going through the market. Once it's done, buyers turn to sellers, or sellers turn to buyers.
Sometimes, it can lead to multiple ups and downs.
The GBPUSD ran below its 200 hour moving average on a break, but stalled just short of the 50% midpoint of the move up from the May 13 low. Sellers. However, the price quickly rebounded back above the 200 hour moving average up to the 100 hour MA at 1.41597. Now the price is back down testing the 50% retracement at 1.4119.
There was not a whole lot of headlines to push the market one way or the other. Admittedly, the technicals may have played a role, but so too may have been “month end flows” (or even London fixing flows which could be the same). PS The EURUSD, USDCHF, USDCAD had similar moves.
The up and down, seemingly randomness, can be frustrating – especially if it involves failed break technically. That can lead to the idea that maybe it's best to step aside. Alternatively, the patient, pick your spots, and if the idea doesn't work, get out. If you are right, maybe look to get out and be happy with the quick profit.