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With the RBA and U.K. services data just ahead, the consolidation pattern on GBP/AUD makes it the one to watch for the next session or two!

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Fresh Market Headlines & Economic data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Australia AIG Servies PMI at 9:30 pm GMT
  • New Zealand ANZ commodity prices at 12:00 am GMT (Mar. 5)
  • Japan Services & Composite PMI at 12:30 am GMT (Mar. 5)
  • Reserve Bank of Australia overnight rate statement at 3:30 am GMT (Mar. 5)
  • Swiss CPI at 7:30 am GMT (Mar. 5)
  • U.K. Services PMI at 9:30 am GMT (Mar. 5)

What to Watch: GBP/AUD

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

With the U.S. trading session looking pretty bare of any potential catalysts, we’re looking out a bit further to the Asia and European session for short-term opportunities. And today, we’ve got a couple of highly probability market movers with the Reserve Bank of Australia’s decision on overnight rates and the U.K.’s latest read on the services sector.

This makes GBP/AUD the pair to watch for the next few sessions, and right now it looks like traders are in a holding pattern on the market as it consolidates between 1.8590 – 1.8715 over the last three sessions.

There are literally so many different ways to play the chart above depending on your biases, but if you’re going with the latest themes of the probability of the U.K. avoiding a no deal Brexit rising and economic growth risks rising in Australia, then a long bias might be the way to go. If so, an upside break of the consolidation is probably the play to watch, but for a conservative entry, looking for a downside break to the previous area of interest around 1.8450 will improve your potential R:R at a cost of potentially missing any further upside moves.

For the bears, there is an opportunity if the RBA surprises the markets once again by defying expectations of bearish rhetoric as they did back at their February meeting, but that’s a low probability scenario at this point given the slew or weak Australian data in February including housing related updates (deteriorating housing data, weak retail sales, lower wages). If they do, then a breakdown of consolidation pattern could lead to a full daily ATR move of around 170 pips to support around the 1.8400 major psychological level.