We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Hopes are high for deeper European economic integration as the continent battles back from the coronavirus slowdowns – but will it hold? What impact can this have on #Euro? Find out from @JStanleyFX here: https://t.co/b9ZWRd4cTr https://t.co/gngm5tKqjz
  • The US Dollar could rise against #ASEAN currencies such as the Singapore Dollar as US-China tensions seem to escalate. The Indian Rupee is also looking ahead of local 1Q GDP data.Get your market update from @ddubrovskyFX here:https://t.co/LkEFJViPWY https://t.co/iL7xlHLBiF
  • #Gold has a short-term bullish set-up that may play nicely with USD weakening. The longer and shorter-term path of least resistance remains higher. Get your $XAUUSD technical analysis from @PaulRobinsonFX here:https://t.co/6gt3F9LuGP https://t.co/B4MVrg8f6i
  • The AUD may suffer as relations between Australia and China deteriorate amid dwindling growth prospects. Euro traders will be closely watching progress in talks about a €500b recovery fund proposal. Get your market update from @ZabelinDimitri here: https://t.co/LkEFJViPWY https://t.co/Fo1wlWyz8r
  • The US Dollar is attempting to find direction against the Singapore Dollar, Philippine Peso and Indonesian Rupiah as technical levels hold. The Malaysian Ringgit eyes a key trend line. Get your #ASEAN currencies market update from @ddubrovskyFX here:https://t.co/lcSLkOnJgQ https://t.co/4ofHIpGiTm
  • Trump says he needs to see a strong study on China's actions surrounding virus - BBG
  • The Dollar Index has broken below a multi-week consolidation / the May opening-range lows and keeps the focus lower heading into June. Get your $USD technical analysis from @MBForex here: https://t.co/hkm3nIoyeh https://t.co/SzMeNFyPyp
  • RT @fxmacro: COVIDView: A Weekly Surveillance Summary of U.S. COVID-19 Activity | CDC https://t.co/Gtr0sUoyft
  • RT @globaltimesnews: The #US, rather than #China, will pay a hefty price for imposing sanctions against #HK in the latest broadsides aimed…
  • Could this be the turning point for the #USD? My majors-based #Dollar index is testing key support from April with positive RSI divergence. If sentiment continues improving, that may offer the fundamental scope to continue lower towards March lows https://t.co/vIIvyF8zpU
A Chance to Enter a Raging GBP/AUD Uptrend

A Chance to Enter a Raging GBP/AUD Uptrend

2013-12-30 18:35:00
Kaye Lee, Head Forex Trading Instructor
Share:

Talking Points:

  • The Relentless 2-Month Uptrend
  • 3 Cautionary Factors That Favor the Downside
  • How to Scalp on Lower Time Frames

Many of the important FX crosses haven’t been showing reasonable entry points of late, particularly because some have been very strongly trending. However, GBPAUD is pulling back just slightly after a strong two-month trending period, and despite how late in the move it is, there may be a chance to enter on the lower time frames.

Even a brief study of the daily chart below would tell traders that the trend is up, and the best risk/reward set-ups are typically found in long trades.

Guest Commentary: Strong Uptrend on GBP/AUD Daily Chart

A_Chance_to_Enter_a_Raging_GBPAUD_Uptrend_body_Picture_3.png, A Chance to Enter a Raging GBP/AUD Uptrend

There are, however, several arguments for the short side as well:

  1. This entry is late in the trend. Nonetheless, trends can go on longer than seems rational, and thus, it is generally wiser not to try to outfox price action
  2. Even if this is an uptrend, price may pull back beyond the rising line of support, especially since bearish divergence is likely to be seen in many oscillators
  3. The current daily candle is threatening to create any number of bearish formations, most notably an evening star-type scenario

As a result, the trade should be taken initially as a scalp on the lower time frames using relatively tight entries and defensive trade management. However, there’s always the possibility of this developing into a longer-term swing trade in due time.

The four-hour chart below does not add much to the study of the trending landscape except for the Fibonacci expansion applied to the last downswing. Price will meet the rising line of support near the 61.8% Fibonacci expansion level, which is to say that this last downswing may be smaller than the previous one.

Guest Commentary: Key Fibonacci Support Level for GBP/AUD

A_Chance_to_Enter_a_Raging_GBPAUD_Uptrend_body_Picture_2.png, A Chance to Enter a Raging GBP/AUD Uptrend

If the trend line breaks, then the 100% Fibonacci expansion level will come into play, but in that scenario, an analysis of the breakout would be necessary.

The hourly chart below actually gives some cause for concern, as the pullback is displaying five-wave Elliott-type characteristics. For Elliott Wave enthusiasts, wave 4 has been chosen because it respects the "rule of alternation," which implies that since wave 2 in this case was deep, wave 4 is often shallow. It is not an Elliott “law,” but it is often true. Nonetheless, this suggests that if the current move is a wave 5, price may turn before even reaching the trend line.

Guest Commentary: Potential 5-Wave Pattern in GBP/AUD

A_Chance_to_Enter_a_Raging_GBPAUD_Uptrend_body_Picture_1.png, A Chance to Enter a Raging GBP/AUD Uptrend

The support zone has been determined using previous resistance to estimate the higher portion of the zone, and when combined with the Fibonacci expansion level, the zone of interest is 1.8468-1.8514.

This trade should be initially taken as a scalp trade on the 15-minute chart (not shown), entering on either bullish reversal divergence, bullish engulfing patterns, or ideally, pin bars.

As always, traders should be prepared to take two or three attempts at entering this trade, and it should be managed using multiple positions so that part can be scalped out quickly at the first sign of trouble. In that scenario, the remainder could be left to develop into a potential swing trade.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.