Trade view /
26 September 2016 at 10:58 GMT
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.
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.
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).
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.
Entry: Buy a break of 0.7065 or a daily close (today) above 1.7116
Time horizon: long-term (year end)
— Edited by Clare MacCarthy
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