GBPAUD Knocking on the Door of a 1,200 Pip Reversal

by Justin Bennett  · 

August 6, 2018

by Justin Bennett  · 

August 6, 2018

by Justin Bennett  · 

August 6, 2018

Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

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

Similar to the EURAUD that I discussed last week and again over the weekend, the GBPAUD has carved what could be a 1,200 pip reversal pattern.

However, there is a significant difference between the two pairs. While the Euro cross remains 300 pips above neckline support, its pound counterpart is challenging the neckline as I type this.

The fact that the GBPAUD is the weaker of the two isn’t all that surprising though. Look no further than the EURCAD and GBPCAD crosses. The latter has already confirmed its head and shoulders pattern while the former has yet to do so.

As for the GBPAUD, this head and shoulders that began forming last November has an approximate height of 1,200 pips. The neckline extends from the year to date low in January and connects with the swing low that materialized between June 4th and 5th.

That puts the measured objective somewhere in the 1.6300 region. That isn’t too far away from the August 2017 swing low at 1.6170. There is also a trend line support that connects the 2016 and 2017 lows, but that level won’t come into play until at least 1.6900.

So as you can see, if the GBPAUD confirms this head and shoulders pattern, shorts will have plenty of room to run.

That said, it’s going to take a daily close (New York 5 pm EST) below neckline support at 1.7520 to get the job done. Until that occurs, the pair is prone to consolidation following last week’s selloff.

Key support below the neckline comes in at the June low of 1.7390. A close below that would expose the year to date low at 1.7100 which is also very near the 50% retracement of the 2016 to 2018 range that spans 2,800 pips.

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GBPAUD head and shoulders pattern

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    1. Cheers. It can be a tricky one to trade at times, but there’s no denying what’s happened here over the last eight months.

  1. Thanks Justin, I was actually thinking I’m already late to catch a trade in GBPAUD. But your analysis has opened my eyes that we are just starting the big move. Looking forward to the break of the neckline.

  2. Your analysis always demystifies forex. Thanks for your highly simplified approach and unflinching support to beginners like us. Bravo sir.

    1. Lee, it isn’t a matter of what I get or don’t get. It’s a game of probabilities, and nothing more.

      If you’re bullish and spot an opportunity to buy, feel free to do so. As for me, I’ll remain bearish for now.

      I welcome comments like yours. After all, without opposing views, we wouldn’t have a market.

  3. According to my IC chart, yesterday GBP / AUD closed at 1.75197.
    Will it be sold or will I wait for today’s closing price?
    Thank you!!!

  4. hello man, i read your piece today and i have realised that there has been a break of the neckline support. thumbs up man, nice piece.

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