1. Sterlingaussie has been aggressively bid higher for the last 7-days on the back of sterling data outperforming last week, broad aussie weakness and a general recovery from lows.
2. Statistically, after analysing the last 16.5yrs of data it shows the probability of a 8th day or more of buying is 0.254% which means there is an implied 98.78% chance that we move higher today - I like these odds so will add a short here.
- If we were to see another day of buying, a 8th day, then the probability of a 9th day is even better on the sell-side odds of 99.918% so i will add to shorts if this is the case - the max number of buying days in GBPAUD has been 10d once and 9d 3 times, 8d 7 times.
3. Plus aussie 30 bill rates firmed up on monday implying only a 5% chance of a september cut down from 8% of the past week, and sterling OIS rates came off from Fridays rally after the market decided to fade last weeks data.
- Also we have found some technical price resistance at the 1.72 handle so being short here makes sense.
Trading strategy - GBPAUD Sell @1.740:
1. Short GBPAUD pretty much at market TP should be 100-200pips lower.
2. Short small and add if we move higher again on thursday - friday imo is the most likely day for a sterling sell-off as shorts are squared up on profit taking.
3. I also like being short gbpnzd and gbpusd from 1.81 and 1.325 - both have 100-200 easy pips - especially on a UK GDP miss on friday.
1. Excel Calculations summary photo - https://filetea.me/t1sl92NbaxfSfGrkXVASYTDmQ
1. Strat trade goes 3/3 - EUR$ and $Index last week came in with stats too