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Speculative Trade Friday 9.27: GBPAUD

by on September 27, 2013 6:54 pm GMT
 

This speculative trade is looking to play continued US dollar and Australian dollar weakness and Pound strength. There is key Australian data out Monday, retail sales, and Tuesday, cash rate report. Also, China reports their manufacturing PMI. The latter is likely to be positive for the Aussie dollar, but retail sales and the Reserve Bank of Australia may be up in the air. The Sterling has garnered strength as Bank of England’s Mark Carney said there is no longer need for England to be on quantitative easing.

Technically, the Pound looks strong. The intraday chart is showing price acting coiling to the apex of a triangle. A break to the upside will spring the GBPUSD back to the intraday highs of 1.6161. Downside support is to be found at the lower trend line, while price action support near 1.5955 – the 50 EMA is slightly below this which will further aid to any significant downside.

4h Chart of GBPUSD

4H Chart of GBPUSD

The daily chart shows the strength of the current uptrend:

Daily Chart of GBPUSD

Daily Chart of GBPUSD

The Aussie dollar has been in a downtrend post-FOMC by showing any willingness to climb with dollar weakness. (This is a clear indication that the FOMC provided a price action boost but no shift in underlying sentiment). The intraday support is at the top of the most recent gap, just under .9300, at .9290. If the downtrend continues, the gap will close and the target is shown (yellow dotted line) at .9220.

4H Chart of AUDUSD

4H Chart of AUDUSD

 

The daily chart of AUDUSD shows the top made just before the fall. The 4H target is shown as support on the daily (green line). A close below will signal further downside to revisit the ascending trend line.

Daily Chart of AUDUSD

Daily Chart of AUDUSD

This all sets up the speculative trade on GBPAUD. This pair is looking to breakout, and there are two upside targets given a break of the minor resistance located on the chart.

Support will be located at 1.7215 and the price action resistance is located at 1.7283. Given the current strength of the Sterling and lack-thereof in the Aussie dollar, target one is set at 1.7331 and target two set at 1.7416.

4H Chart of GBPAUD

4H Chart of GBPAUD

Set stop-losses accordingly. With minor crosses of this nature, wide pip ranges are normal. Remember to use low leverage to avoid being  stopped-out early or face a margin call.