GBPAUD Exhaustion Trade- Longs at Risk Sub 1.9000
Chart Created Using FXCM Marketscope 2.0
- GBPAUD runs into resistance confluence / MLP
- Longs at risk sub 1.8960- 1.9011- bearish invalidation
- Interim support 1.8745/65, 1.8650, 1.8408/37 – Broader bullish invalidation
- Daily RSI support trigger pending- break would suggest correction lower
- Event Risk Ahead: Australian Employment on Thursday
Notes: The pair came into resistance at the confluence of the 88.6% retracement of the 2014 range, the 2014 high day close and the 78.6% extension of the advance of the yearly low (1.8960-1.9011). We’ve been holding within the confines of a well defined pitchfork off the November low and we’ll look for a possible breakdown below this resistance range to trigger a near-term correction in the pair. Note that the last time we had a 5-day rally (Mid-May), the market corrected lower, paring nearly the entire monthly advance before stabilizing. Ultimately we would be looking to buy this pullback.
Bottom line: longs are at risk sub-1.90 with a break below the lower MLP / 1.8744 targeting subsequent support targets towards the monthly low. A breach above 1.90 invalidates our near-term bias with such a scenario targeting resistance targets into 1.9125 and 1.9184-1.9224. Caution is warranted heading into the Australian employment report later this week with the release likely to fuel added volatility in Aussie crosses.
* 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.
Relevant Data Releases
Other Setups in Play:
- Gold Scalps Target Key Inflection Range- Rally at Risk Sub-$1237
- AUDCAD Short Bias Vulnerable- Scalps Target Weekly Opening Range
- Key EURUSD Scalp Targets Heading Into ECB / NFPs
- Scalping the AUDNZD Rebound- Key Resistance 1.09
- EURJPY Correction to Favor Short Scalp Entries Sub-1.48
---Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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