GBP/AUD at Risk for Key Reversal Above 1.6977
- GBPAUD Responds to key support confluence- constructive above 1.6977
- Updated targets & invalidation levels
Broader Technical Outlook: GBPAUD is approaching a key area of confluence support at 1.6976-1.7044 - a region defined by the July low, the 76.4% retracement of the August advance, the lower median-line parallel extending off the yearly lows and the embedded near-term descending parallel support. It’s too soon to tell if this level will prompt a reversal but if GBPAUD is going to rebound, this is a good place to look.
A break below this level risks substantial losses for the pair with such a scenario targeting the 2016 low at 1.6721 & a longer-dated 76.4% retracement at 1.6264. Interim resistance stands with the median-line of the descending structure (~1.7370) backed by the monthly open & 1.7620- a breach above this region would be needed to validate a broader reversal in the pair.
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Notes: The pair is trading within the confines of a near-term descending median-line formation extending off the monthly highs with the pair responding to confluence support in early New York trade today. We discussed this setup in today’s webinar on SB Trade Desk and although we are holding a long-bias against 1.7044,we’ll want to see a rally surpassing initial resistance at 1.7212 to keep the immediate topside bias in play. A breach higher targets subsequent topside targets at the monthly open / 50-line 1.7467/70 & the 50% retracement at 1.7416.
A break below our bullish invaldiation level at 1.6977 would put the short-side back in focus targeting 1.6918 & 1.6845. Keep in mind this is a wider range setup with a quarter of the daily average true range (ATR) yielding profit targets of 53-58 pips per scalp. From a trading standpint we’ll favor fading GBPAUD weakness while above this key structural support confluence. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount.
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---Written by Michael Boutros, Currency Strategist with DailyFX
Join Michael for Live Scalping Webinars on Mondays on DailyFX and Tuesday, Wednesday & Thursday’s on SB Trade Desk at 12:30 GMT (8:30ET)
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.