GBPAUD: Keep This 1,440 Pip Range on Your Radar

For the past year, GBPAUD has been caught in a 1,440 pip range.

The 1.7280 area has served as support since August of last year while the 1.8720 region has attracted sellers beginning with the October 2018 selloff.

Last week tested the 1.8720 area. And so far, sellers are doing their part.

However, there hasn’t been much in the way of bearish price action, at least not yet.

GBPAUD can also be a problematic pair to trade.

There’s no other way to say it. Its behavior is similar to that of EURAUD and even EURNZD and GBPNZD.

I usually group those four together when describing their behavior.

Even if GBPAUD were to carve a bearish pin bar or engulfing pattern up here, shorting the pound cross near multi-year highs is risky.

A view of the price action since the 2016 low depicts an uptrend that is currently up more than 3,000 pips.

That means this 1,440 pip range may be a temporary pause.

If it is, we could see the GBPAUD trend higher following this period of consolidation.

On the flip side, if GBPAUD is intent on testing the range floor at 1.7280 once more, shorts could turn out to be incredibly profitable.

One way to capitalize on potential weakness without getting burned at extreme highs like this is to identify a secondary pattern.

Channels are my go-to formation for that.

They occur more often than most realize and can be incredibly profitable if traded correctly.

It just so happens we have an ascending channel within the current range.

It’s going to take a close below channel support to confirm the breakdown and expose the 1.7740 support area.

Go here to get access to the same “New York close” Forex charts I use.

I’m sure some will ask: why not just sell now?

You could, but again, GBPAUD has been trending higher since 2016.

So without some form of bearish price action up here, you risk getting caught on the wrong side of a trending market.

If you do sell at current levels, it may not be a bad idea to lower your position size. You can always add to the position later should GBPAUD sellers follow through.

In summary, a close below channel support would expose 1.7740 followed by 1.7280. Alternatively, a close above 1.8720 would target channel resistance.

I will be keeping a close eye on this one as the price action unfolds.

IMPORTANT: I use New York close charts so that each day closes at 5 pm EST.

Click Here to get access to the same charts I use.