Going with a Sterling special this week with U.K. jobs update tomorrow and a possible pick up in Brexit activity, and taking another look at AUD/CAD with Aussie & Loonie events ahead.
In the upcoming London trade session, we’ll see the latest employment situation update in the U.K., which can bring a solid burst in volatility and short-term trading opportunities in the British pound. If this week’s events have you feeling bearish on Sterling (and leaning with the recent global risk-off sentiment), then the price action on GBP/JPY may interest you.
On the four hour chart above, we can see that the pair has already busted below a major support area around the 144.00 handle, but now finding support above the 141.00 handle. The stochastic indicator is potentially signaling a short-term bottom as it diverges with price action, so for you bears an opportunity may come at a better price if the pair bounce. Look for a retest and reversal short patterns between the last consolidation area just under 143.00 up to the 144.00, which is not too far away considering that this pair’s ATR shows that it moves around 300 pips on average per week.
If this week’s spark a bullish sentiment shift for Sterling, then you may want to consider the the price action on EUR/GBP for your next move. On the four hour chart above, the pair has clearly been in a range since the beginning of March, usually topping out around the 0.8650 – 0.8700 area while finding bottoms around the 0.8500 major psychological level. With the market currently testing the range top and stochastic signaling potentially overbought conditions, this is a low risk setup to check out in case traders get sour on Sterling this week. And if considering the daily ATR of around 50 pips as a potential stop, the potential return-on-risk if targeting the bottom of the range is very, very attractive.
For those of you looking outside of Sterling this week, AUD/CAD makes it to the watchlist once again as its strong run lower continues. The pair just broke a strong area of interest around 0.9400 but the stochastic indicator is signaling potentially oversold conditions that my finally slow the sellers down. Watch out for a bounce, and if it does come potential resistance may appear around that 0.9400 handle up to the 0.9450 area. If momentum to the downside occurs, the February lows just above the0.9300 could potentially block an extended downside move, but if it doesn’t we doesn’t see any previous area of support to draw in bulls until the 2018 lows, where the last big bounce came.