Thanks to the recent weakness in Australia’s economic reports, I’m switching to a bearish AUD bias! I’ll still be waiting for Australia’s jobs release, but I’m keeping my eyes glued on this potential long GBP/AUD play.
From a technical perspective, I’m eyeing the support region at the area of interest right around the middle of the rising channel on the 4-hour time frame. Stochastic is already moving up from the oversold area, reflecting a return of bullish momentum, but price might still make a deeper pullback to my buy zone at the 1.8100-1.8150 levels.
Fundamentally speaking, the British pound seems to be on a much stronger footing compared to the Australian dollar. After all, the BOE is looking to hike interest rates before the end of the year in order to keep house price inflation contained. Meanwhile, Australia is facing government budget cuts and AUD can keep getting weighed down by the RBA’s cautious bias.
Although China did show some signs of a rebound in manufacturing recently, the positive effect on Australia’s trade industry and overall economic performance may take a while to kick in. With that, I’m still favoring the pound for now, as the U.K. has been printing consistently upbeat data so far.
I haven’t set any entry orders yet, as I plan to watch the Australian jobs release before deciding where exactly to buy. A strong report could allow me to enter a long trade at a good price closer to the channel support while a weak report might convince me to enter at market.
I’ll keep y’all posted!
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