The GBP/AUD pair initially tried to rally during the course of the day on Tuesday, but found the 2.13 level to be a bit too resistive. Because of this, we ended up forming a relatively negative candle, one that looks a bit like a shooting star. With that in mind, it appears that the market will continue to go lower from here, on a break down below the bottom of the daily range. At that point in time, I feel that the market will probably head towards the 2.10 handle, and possibly even as low as the 2.09 level.
Gold markets starting to show bits of strength now, and that of course is good for the Australian dollar. On top of that, the British pound has been horrible lately, and as it is an underperformer, it makes sense that the market could prefer the “new kid in town” when it comes to positivity. If the Australian dollar continues to go higher in general, this could be a great way to play that strength as the British pound just simply cannot get out of its own way at times.
The significance of 2.15
I believe that the 2.15 level is very significant, and I am not interested in buying this pair until we break above there, or form some type of massive supportive candle below at a large, round, psychologically significant number such as the 2.10 level. With that in mind, I am looking to sell short-term rallies as well as breakdowns of the daily range. I don’t think that the British pound is going to show the kind of strength that we have seen recently, so quite frankly I feel this is more or less a reflection on what’s going on in the Australian dollar in general.
Keep in mind that this is a cross pair, so it can move rather quickly at times. Nonetheless, keep your position size reasonable, and you should do fine as this pair does look like it’s beginning to “roll over.”
