Today, we’ve got an Aussie special for both the bulls and the bears, this time with classic setups on longer time frames.
For Aussie bears, we think this setup on the daily chart of GBP/AUD is definitely one to watch. The first half of 2019 wasn’t so kind to GBP/AUD bulls, but pair bottomed out for the year back in July around the 1.7550 handle. Since then, the market made a stunning rally of over +11% to 1.9500 before its current pullback, which is now testing the rising lows pattern formed through August and September.
With the stochastic already indicating oversold conditions and the momentum potentially reversing at the moment, this could be a setup for a longer-term position play with a great potential return-on-risk outlook if using a stop slightly beyond the rising trendline and targeting the recent swing high around 1.9500 and beyond.
And for the Aussie bulls, we’ve got this very simple resistance break on AUD/JPY to check out, especially with the recent global risk-on sentiment in the market lately. On the four hour chart above, we can see that the area between 75.00 – 76.00 has been a very strong area of interest, recently serving as resistance since the end of May. But this week, we saw a strong break above the 76.00 handle, which could draw in technical buyers, especially those who wish to express their positive global risk sentiment views by shorting the safe haven currencies like the Japanese yen.
The question now, though, is whether or not it’s a straight shot higher from here, or will the bulls get an opportunity to play the trend higher on a pullback? Being that it is holiday season and a low liquidity environment, it’s probably a good idea for a pullback to 76.00 to hop in a better price, but for those who are a little more aggressive, there’s nothing wrong with scaling into a position, starting with current levels down to the area of strong interest.
Whatever strategy you decide to go with, always remember to practice good risk management skills when you execute them trading plans!
Forex Chart Settings:
Slow Stochastic: 14,3,3