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Scalping the GBPAUD Recovery- 1.8050 Key Resistance

Scalping the GBPAUD Recovery- 1.8050 Key Resistance

2014-04-15 18:51:00
Michael Boutros, Strategist
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Talking Points

  • GBPAUD breaks above bearish technical formation
  • Momentum divergence warns of possible exhaustion
  • Weekly opening range breaks shifts near-term bias higher

GBPAUD Daily Chart

Forex-Scalping-the-GBPAUD-Recovery--1.8050-Key-Resistance_body_Picture_2.png, Scalping the GBPAUD Recovery- 1.8050 Key Resistance

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPAUD breaks channel resistance dating March high- correction?
  • Daily RSI divergence on the rebound off 100% extension- bullish
  • Broader outlook weighted to the downside Sub 1.8020/50- key resistance
  • Support at 1.7738/56 (April ORL / 100% extension)- bullish invalidation
  • Break targets 1.7663, 1.7483, 1.7304/49
  • Multiple topside RSI triggers pending
  • Event Risk Ahead: UK employment data tomorrow

GBPAUD Scalp Chart

Forex-Scalping-the-GBPAUD-Recovery--1.8050-Key-Resistance_body_Picture_1.png, Scalping the GBPAUD Recovery- 1.8050 Key Resistance

Notes: The GBPAUD looks to have broken trendline resistance dating back to the March high with today’s advance also breaching the weekly opening range high at 1.7842. Although our broader bias remains weighted to the downside below the April high, a near-term recovery is now in focus. Looking for a high to possibly sell into heading into Thursday/Friday with only a break/close above the April high invalidation the broader bearish outlook.

Bottom line: nimble longs are in play here on the back of the weekly opening range break with the rally likely to offer more favorable short entries higher up. A move back below 1.7840 puts us neutral with only a break sub-1.7738 putting the broader bearish trend / head and shoulders objectives into view. Use caution heading into tomorrow’s UK employment report with sterling crosses likely to see increased volatility on the release. 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

30min

1.7916

50% Retracement (Oct Low)

Resistance Target 2

30min

1.7954

Last Week’s High / Soft Resistance

Resistance Target 3

30min

1.7993

23.6% Retracement

Bearish Invalidation

Daily / 30min

1.8022/50

23.6% & 38.2% Retracements

Break Target 1

30min

1.8073/78

April ORH / 23.6% Retracement (Jan High)

Break Target 2

Daily / 30min

1.8151/64

61.8% Extension / 38.2% Retracement

Support Target 1

30min

1.7842

Weekly ORH / Soft Support

Bullish Invalidation

Daily / 30min

1.7738/56

100% Extension (2014 High) / April ORL

Break Target 1

Daily / 30min

1.7665

50% Retracement

Break Target 2

30min

1.7618

61.8% Retracement

Break Target 3

30min

1.7564

Soft Support / Nov Swing Low

Break Target 4

Daily / 30min

1.7482

August High

Average True Range

Daily (20)

131

Profit Targets 30-33pips

*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 Tuesday-Thursday this week on DailyFX Plus (Exclusive of Live Clients) at 12:30 GMT (8:30ET)

Interested in learning about Fibonacci? Watch this Video

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