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GBP/AUD Continues To Impress

Last updated 2/9/2009 2:18 PM EST (GMT -5) 0 Comments - Add your comment

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FX360 Technical Analyst Staff

Technical Analyst, GFT

We first discussed this setup on January 27th, 2009 in " GBP/AUD May Provide Excellent Sell Opportunity ," and most recently posted an update with stop-loss and profit targets on February 2nd, 2009 in " GBP/AUD Coming Off Critical Resistance ."

Well, our initial profit target (T1) of over 500 pips was acheived rather quickly, and we currently sit about halfway to T2 at 2.1584. The GBP/AUD has already dropped about 1,000 pips since completing the bearish Gartley pattern that triggered the original short entry (see daily chart), but currently is at somewhat of a turning point.

Friday's low of just under 2.1800 found support at a 50% retracement of CD, and prices recently re-tested this level failing to make a new low. This could lead to a potential rally up to key resistance near 2.2300 followed by 2.2450. These levels reflect Fibonacci convergence and thus define another potential bearish Gartley pattern as shown on the 2hr chart below. As a result, these levels provide a high probability opportunity to re-enter, or scale into, the ongoing short. Our stop-loss has been tightened/adjusted to 2.2515, and our next profit target (T2) remains unchanged at 2.1584.

However, if prices fail to rally above point B on the 2hr chart (2.2203), and close below point A (2.1770) this would suggest a potentially strong bearish continuation in which case we will look for a new target (T3) just above 78.6% of the daily CD leg at 2.1221.

Daily Chart - Last week's sell in progress, T1 acheived.	2hr Chart - A potential rally to bearish Gartley pattern completion to either point D could provide high probability short, but break below A before reaching these levels could signal another sell-off.

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