Forex Trade Idea: Long GBP/AUD

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.

GBP/AUD 4-hour Forex Chart

GBP/AUD 4-hour Forex Chart

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!

Happy time

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  • Tushar

    great set up. i can see. keep it up for good work.

    • Happy Pip

      Thanks for the positive feedback! Hope I can get in at a good price and manage my trade properly. I’ll keep ya posted!

  • ForExchange

    Hi Happypip,

    watch out though because of Westpac Consumer Sentiment for AUD and Chinese data is also not too bad lately. GBP is producing bad reports on the other hand in the last days.

    I would be very interested what you have to say then about an AUD/NZD short setup because of the recent Kiwi strength and Fitch upgrade?

    Good luck,
    ForExchange

    • Happy Pip

      Yeah that’s what I’m worried about too, just trying to see if this is short-term noise or if it’s enough to change the bigger picture. I’ll take a look at AUD/NZD and share my thoughts with ya. Thanks for the feedback, really appreciate it!

  • Steven

    Looks like a decent setup, however I believe a EURGBP short would be the better setup given the fact that Carney might raise interest rates sooner than expected and Draghi has assured us that there will be no rate increases until 2016

    • Happy Pip

      Yeah, definitely digging that setup! Just that I’m trying to focus on comdolls for this blog, but Cyclopip might be more interested to take that EUR/GBP one. Lines up nicely both fundamentally and technically. Did you short already?

  • Steven

    Yeah I am a technician at a managed fund and we shorted this at .79757 with a 15 lot trade

    TP at .77822 for a 15% gain if it hits

    • I see. Hold on, are we talking about the same pair?

  • John

    Don’t hold it for too long though, the negative roll over rate on long GBP/AUD is terrible.

    • Yipes, fair point. Thanks for reminding me of this.

  • Yes, I am totally agree, I am short with the euro against the pound since 0.7950. It has a nice down trend if you take a look to a daily, weekly and monthly chart. Price is below 100 and 200 days moving average, so that is bullish. Every time It has a rally, It just keeps going lower. Do you have a tracking record?

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  • thankyou

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