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GBPAUD Outside Reversal Favors Long Scalps- 1.8440 Resistance

GBPAUD Outside Reversal Favors Long Scalps- 1.8440 Resistance

2014-10-09 19:58:00
Michael Boutros, Strategist
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Talking Points

GBP/AUD Daily Chart

GBPAUD Outside Reversal Favors Long Scalps- 1.8440 Resistance

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • GBPAUD posts outside daily reversal candle- constructive
  • Resistance 8433/41- Weekly opening range high / 61.8% confluence
  • Breach targets monthly high/resistance at 1.8682- 1.8722, 1.8823, 1.8960
  • Support at 1.8178/91- bullish invalidation
  • Break targets support objectives at 1.8122/40, 1.7948
  • Daily RSI turn ahead of 50 / 60-breach would be bullish
  • Limited event risk into the weekend

GBP/AUD 30min Chart

GBPAUD Outside Reversal Favors Long Scalps- 1.8440 Resistance

Notes: An outside day reversal candle today off key support shifts the near-term focus back to the topside for the GBPAUD with a breach above the weekly opening range high at 1.8433/40 needed to validate our directional bias. Note that after achieving our first primary objective, the AUDUSD reversed back below the October opening range high noted yesterday, invalidating our topside scalp bias. As such, it’s likely that further Aussie weakness may continue to support GBPAUD.

Bottom line: we’ll look to buy dips while above last week’s low at the 1.83-handle with only a break below this week’s low invalidating our near-term bias. Event risk into the close of the week should be limited and as such we’ll look to broader market sentiment for guidance here. Keep in mind that the ATR here is rather wide at 184pips yielding profit targets of 40-45pips per scalp. Follow the progress of trade setups like these 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

30min

1.8383

38.2% Retracement

Bearish Invalidation

Daily / 30min

1.8433/41

Weekly ORH / 61.8%, 50% Retracements

Break Target 1

30min

1.8497

61.8% Retracement

Break Target 2

30min

1.8550

Soft Resistance / Pivot

Break Target 3

30min

1.8579

78.6% Retracement

Break Target 4

30min

1.8627

88.6% Retracement

Break Target 5

Daily / 30min

1.8682- 1.8722

October ORH / 100% Ext / 76.4% Retrace

Support Target 1

30min

1.8313

23.6% Retracement

Support Target 2

30min

1.8240

~ Pitchfork Support

Bullish Invalidation

Daily / 30min

1.8191/98

Oct ORL / Aug, June Highs / 200MDA (8178)

Break Target 1

Daily / 30min

1.8122/40

38.2% Retrace / Monthly Central Pivot

Break Target 2

Daily / 30min

1.8078

Sept Swing High / Soft Support

Break Target 3

Daily

1.7948

50% Retracement

Average True Range

Daily (20)

184

Profit Targets 40-45pips

*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

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