We’ve got an Aussie and Sterling special this week with the RBA and never ending Brexit saga in play to bring some volatility!
First up is this bearish pattern on AUD/CAD. On the longer-term charts, AUD/CAD has been in a slow grinding downtrend since mid-2017 where it topped out around 1.0340. In the past month, the pair has consolidated into a rising wedge pattern, and it looks like rising ‘lows’ could be ready to break this week.
We’ve got the Reserve Bank of Australia’s latest interest rate decision coming up soon, which could be the catalyst to get seller to take control. If there is a break lower, it’s about 160 pips to the next support area just above the 0.9400 handle, which is a reasonable target for the next week or so given its average weekly ATR of around 130 pips.
GBP/AUD has double the chance to see some action this week, not only thanks to the upcoming RBA monetary policy decision, but Brexit developments are always coming for now and they tend to not disappoint in bringing some volatility for traders to take advantage of each and every week.
The pair just recently broke a symmetrical triangle pattern to the downside, and then bounce back up to the broken rising ‘lows’ pattern. If you’re Sterling bear and Aussie bull, this is the perfect setup to play a pick up in volatility and reversal to the downside, but keep in mind its daily ATR is relatively big of over 200 pips. With top tier events this week, the likely volatility has a chance of going well above that 200 pips, so adjust accordingly to limit max risk.
And last but not least, for those of you optimists out there thinking that a no-deal Brexit situation could be avoided, then this downtrending market in EUR/GBP is worth taking a look at.
The pair has moved lower all year from just under 0.9100, but the bulls and the bears seem to be slugging it out pretty evenly around the 0.8600. Since the pair is in a downtrend, odds are for that support forming around the 0.8500 could break if the worse case Brexit scenario is avoided, and with no support until 0.8300, the potential R:R looks solid for a short term setup if targeting you exits around the weekly ATR of around 140 pips.
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