So far so good on my short-term EUR/AUD pullback play, and I’m seeing a similar setup materializing on GBP/AUD. This time, though, I’m gonna hold out for more confirmation before going long.
GBP/AUD Trade Idea
This pair has been trading in an ascending channel formation on its 4-hour chart and is currently testing support.
This lines up with the 1.7350-1.7400 psychological levels and the 50% Fib, which suggests that there’s some buying interest right here.
I’m not seeing much bullish momentum at this point, however, which means that a support breakdown is still a possibility.
Stochastic has pulled up from the oversold area to show that buyers are trying to take the upper hand, but I think I’ll wait for a bigger bounce first before hopping in.
U.K. economic reports have turned out stronger than expected so far but, with the context provided by the BOE in that consumers are taking a pinch from rising price levels, the pickup in core and headline CPI could be indicative of weaker spending activity down the line.
Perhaps we’ll see more clues once the jobs and retail sales figures are printed in the next couple of days.
In particular, I’m keeping close tabs on the average earnings index to see if wage growth can keep up with increasing prices of basic goods.
Analysts are expecting to see a gain from 2.3% to 2.4% and a higher than expected read could revive confidence in the consumer sector. Retail sales could post a 1.2% rebound in April, also reflecting resilience among Brits.
On the flip side, the Aussie is still experiencing bearish pressure owing to weak data points from China in the past few days. This has led to speculations of lower business activity, which in turn translates to weaker demand for Australia’s commodity products.
The Land Down Under is also set to print its jobs figures in tomorrow’s Asian session so I’ll wait and see if it sparks a bounce for this pair.For now, I’m looking at a potential buy stop order past the 1.7400 mark with an SL below the lowest Fib or 1.7300 and a profit target close to the 1.7700 mark at the channel resistance.
I’ll keep you posted if I do hop in so stay tuned to my blog updates!
As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
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