GBP/AUD faces key test
Fawad Razaqzada September 11, 2017 1:31 PM
Given the possibility for a more meaningful dollar comeback, the pound’s potential strength may become more obvious against other currencies that are also falling against the greenback.
With the dollar staging a broad-based recovery today, the GBP/USD has paused for breath after its vicious rally at the end of last week. But the pound will take centre stage again this week due to a number of UK economic events, including the release of CPI on Tuesday and wages data on Wednesday, and the Bank of England’s latest monetary policy decision on Thursday. Given the possibility for a more meaningful dollar comeback, the pound’s potential strength may become more obvious against other currencies that are also falling against the greenback. One interesting cross is the GBP/AUD given that we also have Australian employment figures and Chinese industrial production data due later this week (Thursday). Thus we could see plenty of volatility in this pair, potentially providing lots of trading opportunities.
Now from a purely technical perspective, the GBP/AUD looks like it may have carved out a bottom. It spent the best part of two weeks trying to move south of the prior low at 1.6270. However, the sellers had a hard time to hold their ground there. In fact, the buyers managed to defend their ground as long-term support at 1.6165/70 held. This level was the last resistance prior to the breakout in March that led to a significant rally. Clearly there was significant buying pressure around this level to have caused that move then. Now back to this level, the buyers have evidently stepped in again. On the weekly time frame, the GBP/AUD looks like it may have formed another higher low. But on the daily time frame it hasn’t broken its market structure of lower lows and lower highs yet. Any move above the most recent high at 1.6550 would put that right. Before we get there, though, the GBP/AUD faces another short-term resistance around 1.6420. Any move below 1.6165/70 would probably be the invalidation point of this potentially bullish outlook.
Source: eSignal and FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.