Throwing GBP/AUD at the top of my watchlist this week with top tier events ahead for both Sterling and Aussie.
Rally Pullback in GBP/AUD?
Checking out GBP/AUD this week ahead of the Bank of England’s latest monetary policy decision, and the big market theme of the rising concerns of a quickly spreading Coronavirus outbreak driving traders away from “risk-on” currencies like the Australian dollar. Aussie traders also have the latest Australian quarterly CPI data to likely bring in volatility to the Aussie this week.
So what I’m looking for is a combination of a weaker-than-expected Australia CPI data, plus the BOE confirming no plans for a rate cut before going long the trend higher in GBP/AUD. And if this scenario plays out, ideally, I’d like to see a pullback first to the broken consolidation area around 1.9100 – 1.9200 and bullish reversal patterns before putting together a long position. There’s a chance we could see this pullback based on the bearish divergence signal between the price action and stochastic indicator.
And even if the Australian CPI data produces a better-than-expected number, as long as it is not way beyond expectations, I’d still look at taking a long position as long as the broad fears remain on the potential reach and damage of the Coronavirus.
So, no trade for now, but I’m definitely setting my alerts to take a look at this pair this week if GBP/AUD gets back to retesting 1.9200 and below.
What do you guys think? Are you watching GBP/AUD for a potential long position as well? Let me know in the comments section below!
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