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GBPAUD Weekly Range in Focus- Bullish Scalp Bias at Risk Sub 1.86

By , Currency Strategist
18 February 2014 20:06 GMT

Talking Points

  • GBPAUD testing interim resistance- Weekly opening range in focus
  • Broader bias remains weighted to the topside
  • Major event risk on tap from the UK

GBPAUD Daily Chart

Forex_GBPAUD_Weekly_Range_in_Focus-_Bullish_Scalp_Bias_at_Risk_Sub_1.86_body_GBPAUD_Daily.png, GBPAUD Weekly Range in Focus- Bullish Scalp Bias at Risk Sub 1.86

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPAYD 1.86 resistance range in focus
  • Breach/Close above targets objectives at 1.8770, 1.8969, 1.9089, 1.9224
  • Support at 1.8148, 1.8023/50- bullish invalidation
  • Daily RSI rebounds at 40-threhold / hold above 50-constructive
  • Weekly opening range break to offer conviction scalp bias (1.8410- 1.8587)
  • Key Events Ahead: UK employment tomorrow and retail sales data on Friday

GBPAUD Scalp Chart

Forex_GBPAUD_Weekly_Range_in_Focus-_Bullish_Scalp_Bias_at_Risk_Sub_1.86_body_GBPAUD_Scalp.png, GBPAUD Weekly Range in Focus- Bullish Scalp Bias at Risk Sub 1.86

Notes: The last time we covered this pair back on December 4th we noted a constructive outlook while above 1.79-handle. The GBPAUD has since achieved all three of our targeted objectives before turning heavy in late January as the Australian dollar mounted a counteroffensive. With the daily momentum signature finding support at the 40-threhsold, we are treating this pullback as a correction within the broader up-trend and our broader bias remains weighted to the topside while above 1.8022/50.

The immediate focus falls on the weekly opening range with the a breach above validating the TL resistance break seen last week and offering conviction on long scalp exposure. Conviction on the resumption of the topside trend is offered with a breach above the near-confluence of the monthly opening range high and a long dated 61.8% Fibonacci extension at 1.8770/95.

A move sub 1.8410/22 would put us neutral with only a break below 1.8364/70 suggesting that a larger correction may be underway. Note that a break below 1.8148 puts possible head and shoulders objectives into play with such a scenario eyeing support targets at 1.8022/50, 1.79, and 1.7663.

Bottom line: although our broader bias remains constructive, we will respect a break of the weekly opening range. Look for guidance from the GBPUSD which faces key resistance at 1.6748/54 and the AUDUSD resistance level at 9080. Note that UK employment data tomorrow and retail sales on Friday could spark added volatility on this long-range scalp and as such, prudence is warranted heading into these prints. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Resistance Target 1

Daily / 30min

1.8525

38.2% Retracement

Bearish Invalidation

Daily / 30min

1.8587/98

Weekly ORH / 38.2% Extension

Break Target 1

30min

1.8650/56

50% Retrace / 50% Ext / Dec High (1.8647)

Break Target 2

30min

1.8715

61.8% Extension

Break Target 3

Daily / 30min

1.8777/97

61.8% Retrace / 78.6% Ext / Feb ORH

Break Target 4

30min

1.8902

100% Fib Ext

Break Target 5

30min

1.8956/68

78.6% Retracement / Jan 24 close

Break Target 6

30min

1.9000

Soft Resistance / Pivot

Bullish Invalidation

30min

1.8410/22

38.2% Retrace / Wkly ORL / Last Wk’s ORH

Break Target 1

30min

1.8364/70

50% & 23.6% Retracement(s)

Break Target 2

30min

1.8306

61.8% Retracement

Break Target 3

30min

1.8223/33

78.6% & 76.4% Retracement(s)

Break Target 4

Daily / 30min

1.8118/48

88.6% Retrace / February ORL / TL Support

Break Target 5

Daily

1.8022/50

38.2% & 23.6% Retrace(s) / Jan Low

Break Target 6

Daily

1.7900

December Low

Average True Range

Daily (20)

215

Profit Targets 51-53pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars this week Monday- Thursday mornings on DailyFX Plus (Exclusive of Live Clients) at 1230 GMT (8:30ET)

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18 February 2014 20:06 GMT