TECHNICALS
On the weekly, GBPAUD’s price action has been slowing down in terms of bullish momentum. A new high has been formed this week with the spike into 1.98330. However, the candlestick closed below previous highest high of 1.97550. The signals to me that bullish momentum is not strong enough to close above the previous highs.
Furthermore, there was a 3 pin formation formed on the Daily. Friday’s candlestick retested the weekly’s previous high of 1.97550 but was shut down immediately and closed below 1.97132. The bodies of the candlestick closed at around 40% of its price action which shows clear price rejection of the upside. Since there were no bullish engulfing candlestick formed, It is clear that bearish momentum will take over now.
A clean short on GBPAUD would be from 1.97550 into the temporarily weekly support of 1.95200 or even 1.94500 if the bearish momentum candlestick is very strong. However, I will spot entries on the 15min timeframe and would have to monitor price momentum.
FUNDAMENTALS
China is starting to see decline in Coronavirus cases because of the containment. Since Australia has a high positive correlation to China, I would expect AUD to regain strength in the upcoming weeks when the Chinese economy starts to show signs of recovery. This fundamentals adds confluence to the technicals in my charts.
On the weekly, GBPAUD’s price action has been slowing down in terms of bullish momentum. A new high has been formed this week with the spike into 1.98330. However, the candlestick closed below previous highest high of 1.97550. The signals to me that bullish momentum is not strong enough to close above the previous highs.
Furthermore, there was a 3 pin formation formed on the Daily. Friday’s candlestick retested the weekly’s previous high of 1.97550 but was shut down immediately and closed below 1.97132. The bodies of the candlestick closed at around 40% of its price action which shows clear price rejection of the upside. Since there were no bullish engulfing candlestick formed, It is clear that bearish momentum will take over now.
A clean short on GBPAUD would be from 1.97550 into the temporarily weekly support of 1.95200 or even 1.94500 if the bearish momentum candlestick is very strong. However, I will spot entries on the 15min timeframe and would have to monitor price momentum.
FUNDAMENTALS
China is starting to see decline in Coronavirus cases because of the containment. Since Australia has a high positive correlation to China, I would expect AUD to regain strength in the upcoming weeks when the Chinese economy starts to show signs of recovery. This fundamentals adds confluence to the technicals in my charts.