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GBPAUD is a pair that I featured over the weekend as one to watch for the week ahead. The pair had several things going for it, including a large bullish pin bar on the weekly time frame.
Not only did this pin bar form at a key horizontal level, it also respected channel support from September of 2014. This gave us a solid reason to believe that the pair was likely to see higher prices in the coming weeks.
GBPAUD weekly chart:
In the weekend commentary, I mentioned that we should watch for a retest of the area between 1.9050 and 1.9075 as new support. However the buyers came out surprisingly strong to start the week, driving price higher by more than 150 pips right off the bat.
Most healthy moves such as this GBPAUD rally will present several opportunities for an entry along the way. This is why it’s important to never chase a market. You always want to wait for the market to come to you.
Yesterday’s rally places the pair above a key inflection point at 1.9300. This area is best viewed on the 4 hour time frame. Given the recent strength of the pair, I like the idea of buying dips at support as the rally begins to take shape.
This is a shorter swing trade than we aim to take, however I like the odds here. Of course those odds increase exponentially with the right bullish price action, which I will be requiring before considering a long position.
Summary: Watch for bullish price action on a 4 hour basis on a retest of 1.9300. Key resistance comes in at 1.9450, giving us 150 pips to work with.
