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GBPAUD Rally Stalls at Key Resistance - Long Scalps at Risk Sub 1.8444

GBPAUD Rally Stalls at Key Resistance - Long Scalps at Risk Sub 1.8444

2014-09-22 19:55:00
Michael Boutros, Strategist
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Talking Points

GBP/AUD Daily Chart

GBPAUD Rally Stalls at Key Resistance - Long Scalps at Risk Sub 1.8444

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPAUD Testing key resistance range 1.8392 – 1.8433- bearish invalidation
  • Breach targets resistance objectives at 1.8526, 1.8723/63, 1.8969 & 1.0989
  • Key support 1.8175- 1.8211- bullish invalidation
  • Break targets support objectives at 1.7860, 1.7756
  • Daily RSI breach above 60- constructive
  • First directional breach of 60-threshold since November 20th- bullish
  • Event Risk Ahead: China Manufacturing PMI tonight, RBA Steven’s Remarks at Melbourne Economic Forum on Wednesday, BoE’sCarney speech in Wales on Thursday

GBP/AUD 30min Chart

GBPAUD Rally Stalls at Key Resistance - Long Scalps at Risk Sub 1.8444

Notes: The GBPAUD is trading within the confines of an ascending Andrew’s Pitchfork formation off the September low. Although our medium-term bias remains weighted to the topside on account of the break of the monthly opening range, the pair has now come into a key resistance region between 1.833/44. Intra-day divergence along the highs here suggests that long-exposure below this region is now vulnerable and if we close sub-1.8433, we’ll be looking to play near-term shorts into pitchfork support. Inevitably we will look to buy this pair lower down with only a break below key support at 1.8175-1.8200 invalidating medium-term bias.

Bottom line: look for a reaction of this level with short triggers in momentum sub-1.8444 favoring near-term short-scalps. A breach above keeps the long focus in play with such a scenario targeting subsequent topside resistance objectives into fresh 6-month highs. Note that there is some event risk on this week with China manufacturing PMI numbers tonight and speeches from RBA Governor Glenn Stevens & BoE Governor Mark Carney later in the week likely to fuel added volatility in Aussie and Sterling crosses. The average true range here is rather healthy with a quarter of the daily ATR suggesting profit targets of roughly 40pips. 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

Technical Relevance

Resistance Target 1

Daily / 30min

1.8433/44

61.8% Ext / 2.618% Ext

Bearish Invalidation

30min

1.8475

September High

Break Target 1

30min

1.8500

Soft Resistance / Big Figure

Break Target 2

30min

1.8526/37

Monthly R1 / 78.6% Ext

Break Target 3

Daily / 30min

1.8600

Big Figure / March Swing High

Break Target 4

30min

1.8691

Soft Resistance / Jan 2nd Swing High

Break Target 5

Daily / 30min

1.8722/63

78.6% Retracement / 100% Ext

Support Target 1

Daily / 30min

1.8392

61.8 Extension

Support Target 2

30min

1.8320

50% Retracement

Support Target 3

30min

1.8289

61.8% Retrace / ~Pitchfork Support

Support Target 4

30min

1.8245

78.6% Retracement

Bullish Invalidation

Daily / 30min

1.8175 – 1.8211

Wkly ORL / 200DMA / Aug & June High / 50% Retrace / Central Pivot

Break Target 1

30min

1.8125

Soft Support / Pivot

Break Target 2

30min

1.8078

Last Week’s ORH

Break Target 3

Daily / 30min

1.7993 – 1.800

38.2% Retrace / Big Figure

Average True Range

Daily (20)

163

Profit Targets 37-41pips

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

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