The GBP/AUD pair tried to rally during the session on Friday, but as you can see got stuck above the 1.69 level, an area that has been rather supportive in the past. The interesting thing of course is the fact that we formed a shooting star, and while that is a generally bearish sign, it should be noted that the British pound itself against the US dollar looks like it's ready for a little bit of a pullback as well. That is why I think this is only a temporary setback for the British pound against the Australian dollar, plus we have a significant area in the form of the 1.68 level just below that should provide some type of support, or at least just below it we should see some.
Technical traders will also notice that the 100 day moving averages flattened right at the 1.68 level, and as a result we will more than likely see people step in. Because of this, I believe that this is essentially a sucker play, and anybody shorting at this point time might be in for a nasty surprise. Quite frankly, if we break the top of the shooting star, I believe this market goes much, much higher.
But then there's the gold market
Most of you understand that the Australian dollar in the gold market tend to run in tandem, and over the long-term will drive each other in one direction or the other. That being the case, I find it hard to imagine that the Australian dollar will fall too drastically, simply because gold is fairly well supported. That is reason enough to think that this market should be choppy, we really have a battle of two currencies again potentially be explosive to the upside. Because of this, looking at the movements in this pair might actually give you a better trade against the US dollar, by simply picking the stronger of the two currencies and playing it against the greenback as the Federal Reserve looks very unlikely to taper off of quantitative easing anytime soon.