Trade Idea: Super Thursday GBP/AUD Short

I’m looking forward to seeing additional volatility for pound pairs during today’s BOE Super Thursday events. As Forex Gump noted in his Economic Snapshot for the U.K. business conditions and trade activity have deteriorated so there’s a good chance for a downbeat announcement. Brexit concerns could also return, as opinion polls are still showing a split vote leading up to the June referendum.

As for the Aussie, I’m thinking that the selloff after the RBA rate cut might already be overdone and that the currency could take advantage of the rally in commodities from here. Here’s what I’ve got on GBP/AUD.

GBP/AUD 4-hour Forex Chart

GBP/AUD 4-hour Forex Chart

As you can see from the pair’s 4-hour forex chart above, the longer-term descending trend line is still holding and is currently being tested. This coincides with the 61.8% Fibonacci retracement level and the 1.9750 minor psychological resistance, which seems to be the line in the sand in terms of a downtrend correction.

I haven’t set any actual entry orders yet since I’m still waiting for the BOE events to unfold. More than a dovish statement and MPC minutes, I’m also counting on downgrades to growth and inflation forecasts in their Inflation Report to push this pair back down. I’m planning on shorting below the 1.9600 handle and aiming for the previous lows near 1.8300 with a stop past the 2.0000 mark.

Remember to never risk more than 1% of a trading account on any single trade and to adjust position sizes accordingly. Create your own ideas, don’t simply copy what I do, and make sure you’ve read our risk disclosure!

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  • Hani Hamdan

    great analysis, will wait to see where the price will go

    • Cyclopip

      Thanks for checking out my blog!

  • forzion

    That trend line got breached. I am long now, cause I went to try catch a reversal in monthly chart. I think the next key resistance would be 2.0000 where are key moving averages in weekly chart. Thats right above 38,2 Fibonacci retracement of the downtrend.

    I would consider shorting at 2.0000. Now I hold having almost 600 pips I began to move my SL to save some gains.

    • Cyclopip

      Yep, I’m considering going long as well, especially since the RBA cut rates and China is still in the middle of a slowdown.

      • forzion

        For now I decided to go out of this. I got almost 600 pips and more than 5% of gains going 2 weeks long. I am going to watch for another entry but I do not like swaps when going long at this pair so I think it is better to stay away if it is in consolidation and we would probably be there few days or weeks.