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Recently I’ve been discussing an ascending channel on GBPAUD.
Since late last year, the pound cross has been trading in a 1,440 pip range. I pointed this out a month ago on March 4th.
But since the December 2018 low, GBPAUD has carved an ascending channel.
The idea was (and still is) to use this channel to identify a break that would expose downside targets.
Last Friday, sellers made their move closing GBPAUD well below support.
However, this past Tuesday’s session closed back above the channel bottom which seemed to have negated the idea.
So GBPAUD shorts are off the table, right?
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Not quite. One thing to keep in mind is that the pair broke channel support last Friday.
That means GBPAUD cleared this channel on a weekly closing basis.
And if we take a look at the weekly time frame below, you can see where this week’s candle has formed a long upper wick.
That wick illustrates the rejection from former channel support which is now serving as new resistance.
I mentioned the idea that GBPAUD is respecting this level on the weekly time frame to Daily Price Action members just the other day.
And so far, so good.
For those who aren’t short here, keep in mind that GBPAUD may want to retest the 1.8500 area next week before moving lower.
You probably also don’t want to enter short here on a Friday in case we get a surprise gap on Monday.
All in all, though, I still think GBPAUD is a sell at least to the 1.7930 area.
And if 1.7930 support gives out, we could see GBPAUD return to the multi-month range floor at 1.7280.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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