Will the pickup in risk aversion be enough to spur a breakout for this pair?
Or can GBP/AUD stay inside its triangle pattern?
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Chinese fixed asset investment up 10.3% vs. 11.3% forecast y/y
China’s industrial production slumped from 8.3% to 6.4% y/y
Chinese retail sales down from 12.1% to 8.5% y/y in July
Japanese industrial production upgraded from 6.2% to 6.5% in July
Australia extends lockdown in Melbourne for two more weeks
Upcoming Potential Catalysts on the Economic Calendar:
Canadian wholesale and manufacturing sales at 12:30 pm GMT
U.S. Empire State manufacturing index at 12:30 pm GMT
U.K. CB leading index at 1:30 pm GMT
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: GBP/AUD
This pair has formed lower highs and found support around the 1.8775 area, creating a descending triangle on its 1-hour chart.
Price is surging towards the resistance near 1.8900, but will sellers defend this level?
Moving averages seem to suggest so, as the 100 SMA is crossing below the 200 SMA to hint that the path of least resistance is to the downside.
At the same time, Stochastic is closing in on the overbought zone to reflect exhaustion among buyers. Turning lower would mean that sellers are back in the game and could drag GBP/AUD back to the triangle bottom.
A break higher, on the other hand, could set off a climb that’s the same size as the triangle, which is roughly 200 pips.
Keep in mind that risk-off flows have been in play so far, as China’s data dump missed expectations while Australia is extending the lockdown in Melbourne.
