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:
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
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.