Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
Back on April 5th, I wrote that I favored GBPAUD shorts below 1.8500.
We had been watching this ascending channel for several weeks before the break on March 29th.
However, buyers closed the pair back inside the channel on a daily closing basis on April 2nd.
At the time, it looked like a false break.
But as convincing as the daily close can be, it isn’t the only closing price that matters.
The weekly close, for example, trumps the daily.
It’s a matter of volume traded. Just as there is more volume in a 24-hour session than a 4-hour one, there is more volume in a week than in a day.
In the case of GBPAUD, the pair closed the week of April 1st back below channel support.
That meant the area was serving as resistance on a weekly closing basis.
Last week’s relief rally brought the pair back to a confluence of resistance at 1.8430.
It’s the intersection of a horizontal level and a short-term trend line that extends from the year-to-date high.
As long as this region is intact on a daily closing basis, I favor selling GBPAUD.
If sellers can get past the recent low at 1.8095, there isn’t much stopping them from reaching the 1.7930 area.
Now, 1.7930 may look a bit “messy” on the daily time frame, at least since last October.
But if you view this area on the weekly time frame, it’s significance becomes clear.
Even though I’m still relatively bearish GBPAUD, you don’t want to chase.
It’s essential to devise a plan for selling the pair that’s in line with your criteria.
Otherwise, you’re just hoping for a favorable outcome which gives you no trading edge whatsoever.
For now, though, GBPAUD is vulnerable while below 1.8430 with key support coming in at 1.7930 followed by 1.7740.
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