GBPAUD Rally Stalls at Key Resistance - Long Scalps at Risk Sub 1.8444

Talking Points

• GBPAUD September opening range break keeps long bias in focus
• Key resistance in view- long scalps at risk
• Event risk on tap this week

GBP/AUD Daily Chart

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

• GBPAUD Testing key resistance range 1.8392 – 1.8433- bearish invalidation
• Breach targets resistance objectives at 1.8526, 1.8723/63, 1.8969 & 1.0989
• Key support 1.8175- 1.8211- bullish invalidation
• Break targets support objectives at 1.7860, 1.7756
• Daily RSI breach above 60- constructive
• First directional breach of 60-threshold since November 20th- bullish
• Event Risk Ahead: China Manufacturing PMI tonight, RBA Steven’s Remarks at Melbourne Economic Forum on Wednesday, BoE’sCarney speech in Wales on Thursday

GBP/AUD 30min Chart

Notes: The GBPAUD is trading within the confines of an ascending Andrew’s Pitchfork formation off the September low. Although our medium-term bias remains weighted to the topside on account of the break of the monthly opening range, the pair has now come into a key resistance region between 1.833/44. Intra-day divergence along the highs here suggests that long-exposure below this region is now vulnerable and if we close sub-1.8433, we’ll be looking to play near-term shorts into pitchfork support. Inevitably we will look to buy this pair lower down with only a break below key support at 1.8175-1.8200 invalidating medium-term bias.

Bottom line: look for a reaction of this level with short triggers in momentum sub-1.8444 favoring near-term short-scalps. A breach above keeps the long focus in play with such a scenario targeting subsequent topside resistance objectives into fresh 6-month highs. Note that there is some event risk on this week with China manufacturing PMI numbers tonight and speeches from RBA Governor Glenn Stevens & BoE Governor Mark Carney later in the week likely to fuel added volatility in Aussie and Sterling crosses. The average true range here is rather healthy with a quarter of the daily ATR suggesting profit targets of roughly 40pips. 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

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

• AUDNZD Scalps Targets Key Inflection Range - 1.1020 Critical Support
• AUDJPY Outside Reversal Day- Scalps Favor Buying Dips Above 96.38
• EURUSD Short Bias at Risk Ahead of FOMC- 1.29 Bullish Invalidation
• AUDCHF Monthly Opening Range Setup- Scalps Target Key Support
• AUDUSD Scalps Target Head and Shoulders Break- Bearish Sub 9236
• GBPJPY Pitchfork Setup- Scalps Target Sunday Gap

---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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