GBP/AUD Posts Key-reversal at Resistance, Watch for Channel Break
For longer-term trading ideas, forecasts, and a library of educational content, check out the DailyFX Trading Guides.
GBP/AUD rallied yesterday into the area of resistance we noted on a trade set-up posted last month, and from that zone a solid key-reversal bar was carved out yesterday. While the reversal-bar at a big inflection point, in of itself, is reason to sit up in one’s chair, there is still a bullish channel (some might think of it as a bear-flag), running on the 4-hr time-frame.
From this seat, the rejection of resistance starts this set-up, but the break of the near-term bullish price sequence is what will really set into motion a move lower. One way to approach this is to enter a partial position around current levels or higher and place a stop above yesterday’s high by say, 20-30 pips.
Upon a break of the lower trend-line of the channel another leg of the trade could be added to form a full-sized position. Taking this approach diminishes initial risk while maximizing on a higher probability set-up after seeing the rejection turn into a break of trend.
Initially, upon confirmation, the trend-lines from August and January will be targeted, in the vicinity of 17500/450, down to this month’s swing low at 17392.
Struggling right now? These 4 core concepts may help you get back on track – Building Confidence in Trading.
GBP/AUD Daily Chart (Key-reversal at resistance)
GBP/AUD 4-hr Chart (Bullish sequence needs to be snapped)
Resources for Forex & CFD Traders
Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.