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With another big time Brexit vote ahead, Sterling stays at the top of the list of currencies with the best potential to see some action. And this consolidation pattern on GBP/AUD is one to watch in case the upcoming votes spark a big directional move.

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
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DJIA: 26826.11 -0.01%
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Bund 10-YR -0.375% -0.032
UK 10-YR: 0.698% -0.054
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Gold: 1488.40 +0.02%
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Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Fed Kaplan speech at 6:00 pm GMT
  • UK MP’s vote on Withdrawal Agreement & Brexit timetable at 7:00 pm GMT
  • U.S. Monthly Budget statement at 7:00 pm GMT
  • RBA Kent speech at 11:20 pm GMT
  • U.S. Mortgage applications at 12:00 pm GMT (Oct. 23)
  • Canada Wholesale sales at 1:30 pm GMT (Oct. 23)
  • U.S. House price index at 2:00 pm GMT (Oct. 23)

What to Watch: GBP/AUD

GBP/AUD 1-Hour Forex Chart
GBP/AUD 1-Hour Forex Chart

Keeping it simple with today’s watchlist with a potential breakout setup on GBP/AUD. Later today, U.K. lawmakers will vote once again on the Brexit Withdrawal agreement, making Sterling the must watch currency of the session. There’s so much uncertainty with today’s vote, not only on the potential outcome, but even with the possibility of Boris Johnson pulling the Brexit legislation to seek an election if he doesn’t get his way.

There’s really no way of telling what we’re gonna see by the end of the Tuesday trading session, which means that once we past today’s events, it’s possible the market on Sterling could move strongly one way or another depending on the outcome.

That makes the tightening triangle pattern on GBP/AUD a setup to watch, not only for the clear points of potential entry if a breakout does occur, but also because of its relatively high average volatility range, with a daily ATR around 190 – 200 pips.

So, it’s probably not a good idea to have a strong bias going into the vote, but instead, if you can watch the price action after the vote, then you’ll want to look out for a break / break-and-retest-hold before choosing a directional bias. Once a direction has been established, using the daily ATR as a stop guide should give the market plenty of breathing room to weather volatility and go for a large potential return.