Partner Center Find a Broker

With broad risk sentiment in positive mode and Brexit drama never-ending, we’re checking out this down trending pattern in GBP/AUD for potential short-term pips.

Equity Markets Bond Yields Commodities & Crypto
DAX: 13173.13 +0.74%
FTSE: 6431.93 +1.83%
S&P 500: 3624.63 +1.10%
NASDAQ: 11929.60 +0.84%
US 10-YR: 0.904% +0.011
Bund 10-YR: -0.549% -0.001
UK 10-YR: 0.35% +0.01
JPN 10-YR: +0.23% 0.00
Oil: 41.65 +3.79%
Gold: 1,888.50 +0.12%
Bitcoin: 16,453.85 +3.42%
Ethereum: 459.62 +2.78%

Fresh Market Headlines & Economic Data:

Dow jumps 350 points, heads for a record close on hope effective vaccines will fuel economic rebound

Moderna says preliminary trial data shows its coronavirus vaccine is more than 94% effective, shares soar

Oil jumps 4% on latest COVID-19 vaccine progress 

China’s factory output beats forecasts as Asia shakes off COVID slump

New York Manufacturing Activity Loses Momentum in November — NY Fed

Germany told 4-5 more months of Covid-19 ‘lockdown light’ restrictions required

ECB’s De Cos says governing council should increase monetary accommodation

Rightmove U.K. House Price Index: Average price of property coming to market dips by 0.5% m/m

UK’s Boris Johnson self-isolating as Brexit talks drag on and policy shift begins

Brexit trade talks could last another two weeks: Ireland’s Coveney

Canadian Manufacturing sales rose 1.5% to $53.8 billion in September

RBA can’t resist ‘gravitational pull’ of low rates

New Zealand services PMI for October was 51.4 vs. 50.3 in September

Japan GDP surges annualized 21.4% but growth outlook remains weak

Japan Industrial production for September 2020: +3.9% m/m; -9.0% y/y

China’s urban unemployment rate was 5.3% in October, 0.1%e points below September

Upcoming Potential Catalysts on the Economic Calendar

Fed Clarida speech at 5:00 pm GMT
BOE Haskel speech at 5:30 pm GMT
Fed Daly speech at 6:45 pm GMT
RBA Kent speech at 10:30 pm GMT
RBA Meeting Minutes at 12:30 am GMT
RBA Debelle speech at 6:00 am GMT

What to Watch: GBP/AUD

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

On the one hour chart above of GBP/AUD, it looks like downside momentum is picking up quickly, likely due to another round of positive vaccine news from Moderna this morning, and likely on the continued uncertainty of when we could see a Brexit deal get done. Bearish moves picked up speed on the session to bring the pair to a strong area of interest just above the major psychological level of  1.8000.

With no expected catalysts to potentially shift bias for the next session or two, we’re watching a break of this previous support area for a potential short idea. Going short in this scenario and/or scaling into a short position up to the falling ‘highs’ pattern makes sense for an entry strategy, and if targeting the next swing low around 1.7935 with a 1/2 daily ATR stop (around 150 pips) gives a  decent short-term return-on-risk of 1:1. 

And if you’re considering this setup for a longer-term play, using the daily ATR as a stop guide and going for the next major swing short around 1.7500 sets up for a very good potential return-on-risk of around 4:1.

For the bulls out there on GBP/AUD, it may take surprise dovish comments from the upcoming RBA meeting minutes and/or shift back to negative global risk sentiment before traders get bullish on the market. If so, watch out for a break of the falling ‘highs’ pattern (around 1.8200) before considering a long position.

Or if the pair does retest the previous swing low around 1.7940 and if we do see bullish reversal patterns there while the above mentioned scenario plays out, then consider a long position at that area for a potential swing play.