GBP/AUD‘s steady uptrend may be disrupted this week with top tier economic catalysts ahead and bearish price action forming at the moment. If so, will this lead to another buying opportunity for the bulls?
GBP/AUD Uptrend Setup
For a lot of the major currencies, it looks like we’ve got a busy week ahead on the forex calendar, raising the odds of volatility spiking for each currency. That’s especially true for Sterling traders, who not only has the latest monetary policy decision from the Bank of England, but also an improving covid-19 environment in the U.K. to factor in.
The Australian dollar is one to watch as well with the RBA hitting the wires with their latest monetary policy statement, and expectations that they will postpone the previously announced reduction of their bond purchasing program. And contrary to the U.K., covid-19 cases are in the rise and lockdown protocols are being heavily enforced, which will likely draw in speculation that Australia’s economy may take a hit in the short-term.
We think on net, we’re more likely to see a continued bullish environment for GBP/AUD in the medium term, but with so many potential catalysts ahead, volatility and directional bias may get choppy this week. And in terms of price action/chart analysis, we’re seeing a bearish divergence form on the four hour chart above, which could draw in technical bears in the short-term.
If we do see GBP/AUD move lower, we’ll be on the watch for a retest of the potential strong area of interest marked on hour chart above around 1.8700, where the rising 100-day moving average, previous consolidation area and rising ‘lows’ pattern meet. If that area holds as support and bullish patterns form, that could draw in technical and fundamental bulls into buying mode.
We may consider a long position at the point, but of course, it’ll also likely depend on what the RBA and BOE say this week, so we’ll be on standby for those events before making a move as well.
What do you all think? Is there a dip ahead for GBP/AUD based on the technicals? Will the upcoming central bank events shift the trend or bring on a buying opportunity at better prices? Let me know in the comments section below!
