Trade Of The Day: GBP/AUD To Test Trend Line Support
Littlefish FX | Feb 01, 2016 05:52AM ET
Trade Of The Day: GBP/AUD. GBP was just briefly supported by the news of BoJ’s easing policy and then sank almost 1.8 percent. Traders are starting to speculate that BoE may cut rate by the end of 2016 hence putting pressure on sterling. GBP has fallen more than 6 percent since November 2015 on the back of diminishing expectations for higher UK interest rate. The AUD showed no explicit response to the BoJ’s new easing monetary policy. AUD/USD peaked at Asian session and then dropped slightly. Aussie was supported by better-than-expected employment figures and improving risk appetite, making it move away from the monthly lows. Markets await the RBA meeting due Tuesday.
Technical: While 2.0360 caps upside reactions expect a grind lower to breach 2.00 en-route to test confluent support at 1.0933 with daily ascending trend line support. Over 2.05 eases immediate downside pressure and suggest broader corrective phase underway.
Trade Idea: I am monitoring price action on a test below 2.00, looking for intraday reversal patterns towards 1.9950/30 where there is confluent support of the daily ascending trend line and the completion of 3 drives to a low patterns, whereby price makes 3 lower lows with declining momentum setting up for a retracement and potentially a reversal. If I get a trigger on this trade I will be targeting 2.05 initially, topside of the channel.
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