Analys från DailyFX
A GBP/AUD Trade That’s "There for the Taking"
Talking Points:
- Key Decision Point for GBP/AUD
- Favorable Risk/Reward on Daily Time Frame
- Diamond Pattern on 4-Hour Chart
- A Momentum Hurdle to Contend with
GBPAUD has been rather generous in its uptrend. Although the pair has been consolidating on the weekly chart (see below), the daily time frame has provided plenty of room for profit. Now, the weekly chart is at or nearing a key decision point.
Guest Commentary: Upward Weekly Bias for GBP/AUD
On the weekly chart, the rising channel supports the uptrend, and the consolidation has price near a level of resistance, which has so far held this week. However, price could break upwards and run off.
Elliott wave counts would suggest at least the potential for a higher high. Even a false breakout as price runs up above the line would provide plenty of opportunity for an intraday trade to work out, and that is the focus of this set-up.
If it builds steam and develops into a run on the weekly chart, then great. If not, though, even a small move should present a favorable profit opportunity.
On the daily chart below, price is nearing a decision level as well as it comes down to test the support of a smaller rising channel. Whether it will bounce or break is anyone’s guess, but the bounce offers better reward for risk, and the upward-trending weekly chart provides a supportive background for this trade.
Guest Commentary: “Bounce-or-Break” Scenario for GBP/AUD
The four-hour chart below provides more supporting information. There is a diamond formation composed of two triangles, one expanding and the other of the normal, symmetrical variety. In this case, the “heart” of the diamond has been chosen as the most significant level.
The lower support level has been selected as a combination of several candle wicks. Of course, both the top and bottom levels of support coincide with the rising line of support, giving the following support zone: 1.6988-1.7063.
Guest Commentary: Diamond Pattern in GBP/AUD
The logical trade will occur on the hourly chart as price touches this zone, and recent price behavior suggests it will, as it is already extremely close to it. The hourly chart is showing some signs of momentum as it barrels towards this area, so it would be nice to see some deceleration before this zone is hit.
Guest Commentary: Heavy GBP/AUD Momentum Acts as Hurdle
Nonetheless, this trade is there for the taking. If the move is a momentum test, then pin bars and engulfing patterns will likely rule the day. If—and this is more likely—price slows down for a few hours before beginning the test, then reversal divergence will be the entry signal.
This is a trend trade, and as usual, two or three tries at it will likely prove worthwhile in the end.
By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
-
Analys från DailyFX8 år ago
EUR/USD Flirts with Monthly Close Under 30 Year Trendline
-
Marknadsnyheter1 år agoUpptäck de bästa verktygen för att analysera Bitcoin!
-
Marknadsnyheter4 år ago
BrainCool AB (publ): erhåller bidrag (grant) om 0,9 MSEK från Vinnova för bolagets projekt inom behandling av covid-19 patienter med hög feber
-
Analys från DailyFX11 år ago
Japanese Yen Breakout or Fakeout? ZAR/JPY May Provide the Answer
-
Analys från DailyFX11 år ago
Price & Time: Key Levels to Watch in the Aftermath of NFP
-
Analys från DailyFX7 år ago
Gold Prices Falter at Resistance: Is the Bullish Run Finished?
-
Nyheter5 år agoTeknisk analys med Martin Hallström och Nils Brobacke
-
Marknadsnyheter6 år ago
Tudorza reduces exacerbations and demonstrates cardiovascular safety in COPD patients