While the price is at the top of the range, and showing signs of weakness, the selling opportunity could be the priority in the short to medium term. In fact, the support could be reached as soon as within 24 hours.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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Trade Idea Details:
Key support levels: 1.8225, 1.8055
Key resistance levels: 1.8590, 1.8337
Price Action: On the hourly chart we can clearly see that GBP/AUD is entering a consolidation phase. This is because the resistance has been formed near 1.8320 area and the support near 1.8055 area. These levels were respected by buyers as well as sellers, confirming the beginning of a range-trading.
Considering that the current price is at the top of the range and the recent rejection of the 200 Exponential Moving Average, it would be reasonable to expect the wave down, towards the support area. Besides, the RSI oscillator formed a bearish divergence, after which, the price went below the 200 EMA. We can see that EMA has been acting as the resistance, after which GBP/AUD produced a new lower low.
All this price action is highly in favor of the downside move. The key support area is seen between 1.8045 and 1.8055, making it a perfect profit-taking zone in the short term.
Potential Trade Idea: The selling area can be considered between 1.8240 and 1.8290. Obviously the higher price gets within this area, the better risk-reward can be achieved. While the target is at 1.8055, stop loss must be placed above recent resistance, ideally at 1.8350 to meed 1:2 risk/reward ratio.