The GBP/AUD fell during the course of the session on Monday, but found enough strength to turn things back around and form a hammer. The hammer of course is a bullish sign, but ultimately we need to pay attention to several different things going on at the same time. For starters, we have to pay attention to the fact that there is a strong uptrend in this general vicinity, and with that I believe that it’s only a matter time before we could see some buyers come back into this market.
I also see that the 200 day exponential moving average it is in this area as well, and as longer-term traders tend to focus on that particular moving average, I believe that we could see quite a bit of buying in this area as well. However, there are a couple of other things to pay attention to as well.
Resistance
I also see that there is resistance in the form of the 2.10 level just above. Also, we have a descending triangle that has formed, and that of course is very negative. Because of this, I think this market is one that’s going to be important to watch, because we could have a significant amount of volatility, but given enough time could have to make some type of permanent decision, so therefore we could get a bit of a breakdown that leads to a downtrend. On the other hand, if we break above the 2.10 level, I believe at that point in time we should continue to go much higher, with stops at the 2.15 level, and then of course the 2.20 level.
I do not believe that you should rush into this position, but once we get an impulsive candle in one direction or the other, it could lead to a longer-term buy-and-hold or perhaps even sell and hold type of situation. Pay quite a bit of attention to this market, be patient, but ultimately you could find yourself with a longer-term trade.
