In our recent report about the GBP/AUD on May 1 we recommended selling the currency pair after we saw it couldn’t break the channel up. We sold it at 1.7220 and made our target at 1.7100 - in just 4 candles on the H4 chart our target was achieved.
Today we would analyze this pair again to discover a new trading opportunity.
Firstly, the pair broke the channel up and was back to trading inside it again. It finally broke it down and now it’s trading inside a new price channel which has just been formed to make the down correction wave. The prices touched the lower limit of the channel in the first trading hours of this week to rise back again because that is a support area for the pair.
The pair is still trading below the simple moving average, so we can expect that the pair will decline further than the last bottom, but the stochastic indicator is still moving up, so we can’t sell now even if the pair makes the distribution process.
The Next Few Days
Based on this overview, we can wait a little for the prices to test the broken channel and touch the SMA50 or be close to it. This way we can sell when the stochastic gives us the sell signal, which would probably be at 1.7320, keeping our first target at 1.7143 and the second one at 1.6990, but if the pair breaks the down channel we have to buy it and keep the target at 1.7560.
We have to be careful from this week's calendar news like the Retail sales from Australia and the PMIs data from the UK.
