Daily Price Action

GBPAUD at Critical Juncture Ahead of RBA Rate Decision


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I mentioned GBPAUD last week, noting that I was bullish about 1.9300. Although we didn’t get the entry we were looking for, the pair certainly didn’t disappoint as it now sits at 1.9600.

The pair finds itself treading water at a critical area ahead of the RBA rate decision that is scheduled for tomorrow at 12:30am EST. As we all know, this type of news event can cause price to swing either way and can be quite volatile.

However in the case of GBPAUD, I’m really only interested in a break higher. This is due to the pattern that the pair has been in since September of last year.

GBPAUD daily chart:

GBPAUD ascending channel on the daily time frame

Notice how the pair has been moving in large swings with each rally ranging between 1,400 and 1,700 pips. This of course doesn’t mean that the pair will rally for an additional 600 pips, but if history is any indication there’s a likely chance of a move higher from current levels.

Luckily we don’t have to rely on chance as we can use the key levels the market gives to us to determine the most likely scenario.

A closer look at the daily chart shows the levels in question where we have the 1.9470 horizontal level as well as trend line resistance from February 12th.

GBPAUD daily chart #2:

GBPAUD daily chart showing critical levels ahead of rba rate decision

From here we can watch for a break above trend line resistance which could trigger a move back to 2.00. Alternatively a move below 1.9470 could produce a decline back to 1.9180.

Due to the impending RBA rate decision, I’m only interested in trading this on a daily close. Therefore I will wait until tomorrow’s close to see where we are when the dust settles.

Summary: Wait for tomorrow’s close before looking for a trade opportunity. A close above trend line resistance would have us looking for a buying opportunity on a retest as new support. Alternatively a daily close below 1.9470 would negate any long opportunity for now.

GBPAUD 4 hour chart showing trend line resistance

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