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Trade view / 26 September 2016 at 10:58 GMT

DeMark suggests GBPAUD is ripe to turn

Analyst / PIA First
United Kingdom
Background

I am building an ambitious long position on GBPAUD based purely on technical analysis and DeMark. Although we have no firm trigger that the selloff has ended, starting to fade to move at current levels offers substantial risk/reward ratio. 

Weekly – After completing an AB=CD formation in the third quarter of 2015, we have seen a sustained move to the downside. However, the selloff has stalled close to a Fibonacci confluence area at 1.7442-1.7163 (61.8% pullback and a 127.2% extension). There's no clear indication of a change of trend yet. However, an important factor here is the DeMark exhaustion 13 count that will be posted this week. 
GBPAUD W
Source: Saxo Bank 
 
Daily – Forming a possible reverse Head and Shoulders pattern. A close today above Friday's high (at 1.7116) would form a bullish Outside Bar (OSB) and offer a good trigger to get long. A break of 1.7810 is needed to confirm this formation with a measured move of 1.8880.
GBPAUD D
Source: Saxo Bank  

Intraday (one-hour) – We are also posting DeMark exhaustion counts on the four and six-hour charts. The projected or suggested stop using Demark is at 1.6845. We would suggest a break of the trend of lower high at 1.7052 and bespoke resistance at 1.7060 to confirm a change of trend (intraday).
GBPAUD 1
Source: Saxo Bank 

Management and risk description

We would not suggest bringing stop to entry until a clear break of 1.7200 as we expect volatility on the move upwards. 

Parameters

Entry: Buy a break of 0.7065 or a daily close (today) above 1.7116

Stop: 1.6845

Target: 1.8880

Time horizon: long-term (year end)

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
26 September
Anton Bushin Anton Bushin
Hi Ian, do you have any new thoughts about EURGBP?
26 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I think we could see 0.8755... it is a 261.8% extension and projected right shoulder
26 September
Anton Bushin Anton Bushin
Thank you. do you see your previous Target: 0.8075 and 0.7960?
Time horizon: before year end
26 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Yes ... but we need to see a change in direction at or close to that level.
27 September
Fali4007 Fali4007
hi Ian,

i dont think is valid im currently short on weekly its showing its aiming for a new low.

can you explain why the maerket is oversold and it is still heading down?

thanks
27 September
Fali4007 Fali4007
is this also a long term trade ie a monthly we should see 1.72
27 September
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
I think we have a reverse head and shoulders.... four hour chart Morning Doji Star
27 September
Fali4007 Fali4007
good luck Ian. Im currently shorton GBP pairs waitcing on wave C to come then i will closeand look to long. I expect the GDP to be bad on friday which will bring us a waterfall
27 September
Fali4007 Fali4007
Hi Ian i couldnt seethe 4h morning doji star?

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