Chart of the Day GBPAUD
GBPAUD Potential Reversal Zone - Probable Price Path
The third quarter has kicked off on a positive note for risk appetite, with modest gains in European and US equity markets, higher global rates and the risk FX pushing higher against a backdrop of a soft USD and other safe-haven currencies. The third quarter has begun as the second quarter finished, with risk assets on the rise. The S&P500 is currently up 0.5%, following 1½% gains over the previous two trading sessions and the near-20% gain in Q2. Note that the last seven times the S&P500 rose by at least 15% in a quarter, it rose by an average 9.5% in the next quarter. Giddy up. Supporting the positive vibe, an early trial on a vaccine produced by Pfizer and BioNtech showed some promising results, with two shots of the vaccine producing “significant levels of virus neutralising antibody” in patients. The flow of information in COVID19 trends and treatment for the virus will remain a key driver of markets in Q3. No one wants to be short equities the day of the announcement of a credible vaccine that can be developed for widespread use. The market has put more stock on the vaccine news than the continuing negative headline news on the virus itself. Arizona reported a record number of cases and deaths while New York City postponed its reopening of indoor dining, adding to other regions which have stalled on reopening plans.
GBP:The outlook for the UK economy has improved, and investors continue to watch the UK epidemic situation and the development of trade negotiations with the EU. The Bank of England Commissioner believes that the British economy has recovered faster than expected, supporting the performance of the British pound. Bank of England Commissioner Jonathan Haskel said that retail sales have generally rebounded from a low in April. It is currently estimated that the recession in the second quarter of the UK is milder than previously expected. The current monetary policy position is appropriate, but the risk is still inclined to decline, and the economic recovery is still full of uncertainty. If there is a second outbreak, the authorities will respond.
AUD: Australia's AIG manufacturing performance index rose to 51.5 in June from 41.6 in May. Construction permits in May fell 16.4% month-on-month, a decline greater than the market expectation of 7.8%. May's trade surplus was 8.025 billion Australian dollars, lower than the market's expected 9 billion Australian dollars. Deputy Governor of the Reserve Bank of Australia Guy Debelle expects policy support to continue for some time, stressing that fiscal policy is the mainstay and pointing out that it does not believe that negative interest rates need to be implemented under the current circumstances
From a technical and trading perspective, the GBPAUD appears to be completing a fve wave decline, in what has been a larger broadening top pattern referenced in the last analysis of this pair. Yesterday's bullish reversal pattern has flipped the daily chart bullish as such it is reasonable to anticipate a minimum three wave correction targeting the 4th wave peak. Froma trading perspective, bullish exposure should be rewarded on a breach of today's current high at 1.8067 looking for a move to test 1.8400, using today's current low as an invalidation level for the corrective thesis.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!