With top tier events from both China & Australia, we’ll check out Aussie setups this week, plus a setup on Sterling as well with the BOE monetary policy meeting ahead.
The Australian dollar is setup to have a busy week with top tier economic updates from Australia, and from China whose economic updates also tend to influence the Aussie given their close trading partnership. Check out Pip Diddy’s forecast on the Aussie, and if you’re leaning towards a long position, you might want to check out AUD/CAD.
The pair has been in a grind lower since April of this year, but the bears seemed to have lost steam over June and July. The pair has stalled between 0.9100 – 0.9200 over the past month, and it looks like we’re now see a retest of the previous swing low at the moment. This could be a buying opportunity if we start to see bullish reversal candles and the stochastic coming out of oversold territory, so be on the look out for that situation, especially if the economic updates do turn out positive.
If you did your Aussie homework and find yourself in the bear camp, then this setup on AUD/NZD may be what you’re looking for. Like AUD/CAD above, AUD/NZD has been in a steady trend lower going all the way back to April, but its recent consolidation pattern is forming somewhat of a symmetrical triangle. This is a much simpler pattern to follow as all we need to look out for is a break of the triangle pattern and momentum to form for it to be a legit sell signal.
If we do see that situation on weak Australia / Chinese data, that should bring in momentum sellers to potentially take the pair lower and retest the next major support area around 1.0300, a reachable goal within the next week given the daily ATR of around 45 – 50 pips.
The British pound is already a big time mover this week thanks to the latest round of Brexit developments that point to an increased probability of a no-deal Brexit. Sterling sold off big time to start the week, prompting the question of “how far it could go? ”
Well, if you’re watching EUR/GBP, there might not be much more legs to the run in the short-term as the pair runs into the rising ‘highs’ pattern and stochastic showing potentially overbought conditions. The pair could stall around this area as traders pause on risk taking with the Bank of England’s latest monetary policy decision coming soon, which is likely to be a highly volatile event.
If we do see volatility, the situation to be on the look out for is a pullback in the uptrend to the broken previous swing high around 0.9050, and for support to form like bullish candle patterns and oversold stochastic signals. That could be the opportunity to enter the strong uptrend in EUR/GBP and play the deteriorating Brexit situation between the European Union and the United Kingdom.