Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/USD’s uptrend, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:
Australia NAB Quarterly Business Confidence at 1:30 am GMT (July 23)
What to Watch: GBP/AUD
Today, we’ve got a classic chart pattern forming on GBP/AUD, a pair that’s been dominated by sellers for the past couple of weeks. And just in the past couple of sessions, the pair made a strong move lower, dropping nearly 400 pips and breaking a strong support area around 1.7930 before bottoming out around the 1.7700 handle.
Now that the pair is bouncing, the question is whether or not forex traders will see it as another selling opportunity at better prices, or is this the start of a fresh leg to the upside?
Well, there doesn’t seem to be a major catalyst ahead that may guide the bias further over the next session, but we do have business confidence data from Australia that may shake up the pair a bit.
For the bears on GBP/AUD, if we see a better-than-expected read on AU business confidence and if global risk sentiment continues to lean positive, watch out for bearish reversal patterns in the Fibonacci resistance area marked on the one hour chart above.
If Stochastic also signals overbought conditions at that time, the odds are better that traders may jump into the pair to play the longer-term downtrend. Also, more news of troubles with Brexit negotiations are likely to push the pair lower.
If we see this play out, traders could take this pair back up to 1.8000 within a session or two (daily ATR is around 140 pips), depending on what may be driving negative risk sentiment.