Talking Points
GBPAUD posts outside day reversal to break August lows- bearish
Near-term scalp bias bearish sub 1.8070
Event risk on tap heading into next week
GBPAUD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
GBPAUD posts outside reversal candle off the 200DMA- bearish
Break below the August opening range low- bearish
Near-term support at TL dating back to the 2014 Low- bullish invalidation
Break targets 1.7873, 1.7823 & 1.7737/56- key support
Resistance at monthly ORL 1.7980/90, 1.8032 & 1.8173/91- bearish invalidation
Daily RSI trigger break- bearish
Watch for RSI 40-break to confirm July reversal
Event Risk Ahead: New Zealand Business Manufacturing PMI tonight, UK GDP on Friday and CPI early next week
GBPAUD 30min Chart
Notes: The GBPAUD looks to be posting an outside reversal candle after rebounding off resistance at the 200-day moving average at 1.8138. Today’s decline has broken TL support dating back to the July 2013 lows and marks the largest daily range since March 18th. In that instance, the pair broke below support at the 1.83 handle and shed another 2.41% before bottoming nearly a month later.
On the back of this morning’s BoE quarterly inflation report, the pound is likely to remain under some pressure and we’ll look to sell rallies in the pair while below the August opening range high at 1.8191. Keep in mind that longer-term, the early 2014 head & shoulders break still targets objectives into 1.7063/97. Use caution heading into Friday’s event risk with the release of the preliminary 2Q GDP figures likely to spur added volatility in sterling crosses. Follow the progress of this trade setup 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
1.7939/43
61.8% Extension / 78.6% Retracement
Resistance Target 2
Daily / 30min
1.7980/90
50% Ext / 61.8% Retrace / August ORL
Resistance Target 3
Daily / 30min
1.8032
61.8% Retracement / August 4th Low
Resistance Target 4
30min
1.8069
Weekly ORL*
Resistance Target 5
Daily / 30min
1.8138/45
200DMA / Weekly ORH*
Bearish Invalidation
Daily / 30min
1.8173/91
August ORH* / 50% Retrace / Monthly Pivot
Break Target 2
Daily
1.8280/90
50% & 38.2% Retracement(s)
Break Target 3
30min
1.8388– 1.8408
100% Ext(s) / 61.8% Retracement
Bullish Invalidation
Daily / 30min
1.7915
Channel Support / Soft Pivot
Break Target 1
Daily / 30min
1.7873/84
78.6%, 88.6% Retracement(s) / 78.6% Ext
Break Target 2
Daily / 30min
1.7822/30
May, June Lows / April 10th Close (Low Day)
Break Target 3
30min
1.7809
88.6% Retracement
Break Target 4
30min
1.7790
100% Ext
Break Target 5
Daily
1.7737/56
100% Ext / 2014 Low
Average True Range
Daily (20)
109
Profit Targets 27-30pips
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
GBPUSD Shorts at Risk Above 1.68 Heading Into BoE, Inflation Data
NZDUSD at Key Support and August Range Low- Exhaustion or Break?
EURUSD Risks Correction Into August Open- 1.3372 Key Ahead of ECB
USDOLLAR Vulnerable Heading Into NFPs- August Setups in Focus
EURAUD Risks Near-Term Reversal Heading Into H&S Target, Key Support
AUDNZD Rally At Risk Ahead of RBNZ- 1.0880 Key Resistance
NZDCAD Testing Range Support Ahead of RBNZ- 9295 Key
GBPJPY Eyes Major Inflection Zone- Weekly Opening Range in Focus
—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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Source: Daily fx