Talking Points
- GBPAUD testing interim resistance- Weekly opening range in focus
- Broader bias remains weighted to the topside
- Major event risk on tap from the UK
GBPAUD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
- GBPAYD 1.86 resistance range in focus
- Breach/Close above targets objectives at 1.8770, 1.8969, 1.9089, 1.9224
- Support at 1.8148, 1.8023/50- bullish invalidation
- Daily RSI rebounds at 40-threhold / hold above 50-constructive
- Weekly opening range break to offer conviction scalp bias (1.8410- 1.8587)
- Key Events Ahead: UK employment tomorrow and retail sales data on Friday
GBPAUD Scalp Chart
Notes: The last time we covered this pair back on December 4th we noted a constructive outlook while above 1.79-handle. The GBPAUD has since achieved all three of our targeted objectives before turning heavy in late January as the Australian dollar mounted a counteroffensive. With the daily momentum signature finding support at the 40-threhsold, we are treating this pullback as a correction within the broader up-trend and our broader bias remains weighted to the topside while above 1.8022/50.
The immediate focus falls on the weekly opening range with the a breach above validating the TL resistance break seen last week and offering conviction on long scalp exposure. Conviction on the resumption of the topside trend is offered with a breach above the near-confluence of the monthly opening range high and a long dated 61.8% Fibonacci extension at 1.8770/95.
A move sub 1.8410/22 would put us neutral with only a break below 1.8364/70 suggesting that a larger correction may be underway. Note that a break below 1.8148 puts possible head and shoulders objectives into play with such a scenario eyeing support targets at 1.8022/50, 1.79, and 1.7663.
Bottom line: although our broader bias remains constructive, we will respect a break of the weekly opening range. Look for guidance from the GBPUSD which faces key resistance at 1.6748/54 and the AUDUSD resistance level at 9080. Note that UK employment data tomorrow and retail sales on Friday could spark added volatility on this long-range scalp and as such, prudence is warranted heading into these prints. 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 | Significance |
Resistance Target 1 | Daily / 30min | 1.8525 | 38.2% Retracement |
Bearish Invalidation | Daily / 30min | 1.8587/98 | Weekly ORH / 38.2% Extension |
Break Target 1 | 30min | 1.8650/56 | 50% Retrace / 50% Ext / Dec High (1.8647) |
Break Target 2 | 30min | 1.8715 | 61.8% Extension |
Break Target 3 | Daily / 30min | 1.8777/97 | 61.8% Retrace / 78.6% Ext / Feb ORH |
Break Target 4 | 30min | 1.8902 | 100% Fib Ext |
Break Target 5 | 30min | 1.8956/68 | 78.6% Retracement / Jan 24 close |
Break Target 6 | 30min | 1.9000 | Soft Resistance / Pivot |
Bullish Invalidation | 30min | 1.8410/22 | 38.2% Retrace / Wkly ORL / Last Wk’s ORH |
Break Target 1 | 30min | 1.8364/70 | 50% & 23.6% Retracement(s) |
Break Target 2 | 30min | 1.8306 | 61.8% Retracement |
Break Target 3 | 30min | 1.8223/33 | 78.6% & 76.4% Retracement(s) |
Break Target 4 | Daily / 30min | 1.8118/48 | 88.6% Retrace / February ORL / TL Support |
Break Target 5 | Daily | 1.8022/50 | 38.2% & 23.6% Retrace(s) / Jan Low |
Break Target 6 | Daily | 1.7900 | December Low |
Average True Range | Daily (20) | 215 | Profit Targets 51-53pips |
*ORH: Opening Range High
*ORL: Opening Range Low
Other Setups in Play:
- GBPCAD Challenging Feb Range High- Scalp Bias Bullish Above 1.8037
- AUDNZD Target Key Resistance- Bullish Scalp Bias at Risk Sub 1.09
- GBPNZD Scalps Target Opening Range- Higher Low in Place?
- AUDCAD Eyes Key Resistance- Bullish Scalp Bias at Risk Sub 9953
- Trading the EURAUD Reversal- Scalp Bias Bearish Below 1.533
---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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