Matt Simpson, CFTe, MSTA
CityIndex
Near-term momentum appears bearish after GBPAUD broke (and closed below) 1.9569.
After giving 2.0 a quick high-five on the 12th Feb GBPAUD sold off and formed a potential Triple Top pattern. The three peaks are marked by prominent upper spikes, with each high trading lower, adding weight to the interim top.
If we compare the three cycle peaks and troughs in relation to the bullish trendline we can also see this currency pair has been quite cyclical. However as the peaks are right-of centre in relation to their troughs (right-translation) it suggests will see new highs above 2.0 over the coming weeks.
That said, the near-term does appear on set to produce a deeper retracement. The break (and close) below 1.9569 confirms the Triple Top to project an approximate target around 1.912, although we do have plenty of potential support levels to either slow the fall or scupper chances of this targeting being achieved. These levels include the 50 DMA, Monthly S1 Pivot and 38.2%, with my preferred support on D1 being around 1.9316 but we can monitor this if price continues to fall and adjust accordingly.
With near-term momentum weak GBPAUD may provide decent opportunity to enter short on intraday timeframes, as long as we remain below the breakout line of 1.9569.
Australia releases Retail Sales and Trade Balance data within the hour as it rests above 1.95 support. There is an upside risk if data comes in comfortably above expectations, with another potential catalyst being MPC rate statement tonight.
Ideally I am hoping for a spike up towards the Daily Pivot before a resumption of the near-term downtrend, with a break below 1.94925 required to confirm resumption of the near-term downtrend.
- Interim targets include 1.9442 S1 or the 1.942 swing low
- A break above the Daily Pivot/1.9569 breakout level will invalidate the analysis.
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