We’re starting on the 4 Hour timeframe today and we’re looking at GBPAUD. What we can notice first off is that we’ve printed a new higher high at the price of 2.03400. Since then we’ve seen a reversal and retracement back into the price regions of 1.98900 where we have a clear level of support. Price is forming higher highs and higher lows, trending back and forth as we look for liquidity to bring price into 2.06000 once again.
We can also see a Doji currently forming on the 4 hour as well as 2 wick rejections. Should price pull back on the next candle open, we could anticipate a wick to be left into the downside and for price to accelerate into the highs leaving a 3 pin pattern. Looking closely at the formations, we have also formed a double bottom at our level labelled ‘ BASE SUPPORT LEVEL ‘ . We are expecting price to reach into the neckline and potentially even further.
Looking at the 15 minute timeframe we can see the double bottom more clearly. With the current counter trend line applied to the charts, we could see a break & retest, pushing price above the psychological key level of 2.00000. Should we see a break above this key level, we could find support before extending price into the highs. By breaking this level, we would also break structure and form a new higher high, signaling a reversal to the upside could be coming.
However, should price struggle below 2.00000, we could retest our support level, finding support around 1.99100, creating an inverse head & shoulder pattern. Upside targets are 2.03600 and 2.06400 respectively.
Now traders, lets take into account the fundamentals for the day ahead. GDP results have been released for QoQ ( quarter on quarter ) as well as YoY ( year over year ). We’ve seen the data fall inline with expectations have a QoQ data point of 0.0% and YoY data point of 1.1%. So we haven’t seen too negative of a result with the current pandemic and economic slowdown. Business investments came out a lot better than expected so we could see a flight into the Pound. There is no main news events today however we see Manufacturing PMI and House / Building approvals data coming out for the Aussie later this week.
As always traders, take care in handling your risk management and be aware of fundamentals, have a great week traders !