Something I have occasionally looked at in the past.
We have to conclude that a price above a medium or long-term EMA has been rising. We can assume that it will now be more likely to rise than to fall. Conversely for prices below the same EMA. You could take this as a measure of “normality”.
But to what extent does this hold true at any given moment and how does the picture change over time?
Last week, of the 26 major forex pairs I watch, only 3 moved according to the principle above. So prices for 23 of the 26 were either above the 50EMA but moved lower or were below the 50EMA but moved higher.
Likewise, only one of the 11 major stock indices or commodities I watch moved “normally”, i.e. they were all either above the 50EMA but fell or were below the 50EMA but rose. The one that stood out was maybe not surprisingly the Nasdaq 100.
Generally, when these results fall to such a low extreme, we see a strong reversion to 50EMA-related “normality” in the following week. I expect to see most “high” markets (prices above the 50EMA) rise strongly and most “low” markets fall strongly. We shall see…