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The strength and weakness table this week suggests the #GBPAUD downtrend could reverse.
However, what do we need to see before we look for the long opportunity?
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
In this video, we’re gonna take a look at GBP/JPY and GBP/AUD.
GBP/JPY
I’m going to take a look at GBP/JPY at the beginning of the video because the price obviously rallied and hit the targets.
I wanted to update you on that. I didn’t read possibilities as well. I’m gonna dive into a four-hour timeframe and look for those key areas of support and resistance.
I quite like this area, so I’m just going to draw a big zone around the 132 area. If the price backs down into this zone, I’d be interested in looking for another long position on GBP/JPY.
Sentiment is very much to the upside on GB Pound at the moment, with that risk appetite. The JP Yen is further weakening. So, I want to look for anything similar to what we have here.
You can see that the price pushed to the downside then came to that level of support. This is what we want to be a buyer of the market. We’re looking for something very similar again.
If we get some pullback into this zone, are we going to get another long opportunity? Watch out for this area. It links up quite nicely into the neckline area.
So if we were to draw the neckline of the overall Head and Shoulders pattern, this is what it would look like because you’ve got a descending trend line as the neckline.
Daily timeframe
If we look at that daily timeframe, we can see the previous high, there, and this high, here. So, if the price drops back towards this zone, I’d be interested in another buying opportunity for GBP/JPY.
GBP/AUD
One chart that I did want to talk about this week was GBP/AUD. I really like this for a potential reversal setup.
There are a couple of things that I want to show you just to see where a market could be oversold or overbought. You can see that the price came into that oversold area.
Weekly timeframe
From a weekly perspective, which can be quite strong, you can see that we have multiple long opportunities with the RSI. So, you can see that the market pulls back a little bit.
If you were trading the lower timeframe, the two key areas of support and resistance would have done pretty well as soon as we got into that oversold area. Again, we can look for those key opportunities there.
So you have one here and you have another there, and there. Looking at those, it provides some decent opportunities.
The last time we were in an oversold condition, this is what we had. The market rallied after that, so we’re coming into that territory once again.
I quite like the idea of GBP/AUD reversals; we just need to see the AU Dollar weak. The only way that’s going to happen is if this risk sentiment fades.
If we go to the Dow Jones, the price is now at the $25,000 level that we’ve been speaking about for a while.
I’m waiting to see how the market reacts to this level. Are we going to see the market pull away from this level and form some kind of double top or lower high from here? Or will the market completely ignore it and continue to the upside?
We’re going to have to wait and see because the price is at this critical point. I don’t want to add any risk sentiment trade at the moment because the price is pushing to the upside. It’s at that key point.
Let’s just wait and see what happens. It might push further. There is this big zone here. The $25,000 level is the area that I was looking for the price to retest weekly. It is now back into this zone.
So, let’s just see what happens if the price starts to reject some restocking daily bearish closes. It will be ideal to look for short sentiment here, which would also coincide with some downside and Aussie at the moment.
Aussie is very strong. We can’t really trade against this at the moment because the price continues to that uptrend making higher highs and higher lows. We need a signal first; a sign that the price will reverse.
If the price does break to the downside, takes out swing lows, then there’d be really good trades and opportunities on that Aussie weakness.
But right now, it’s looking at how we can set up a potential opportunity.
Support and resistance
Looking at support and resistance levels, we are at a point where the price reacted in the past. You can see rejection, support, and support on that most recent run-up.
We are coming into an area of support on the weekly. It’s just that we need to see some action on the daily perspective, even on a four-hour.
Four-hour timeframe
If we’re going to the four-hour timeframe, these trends are very, very much down. There’s no real considerable pull backs about these moves like this.
But now, the impulses are starting to become shallower; there could be a potential reversal. If the price takes out this high, then I’ll be looking for a pullback continuation move from here.
The Aussie is very much in the zone; very much a reversal pair of the week, in terms of looking at the strength and weakness analysis.
We have to wait for the price action to line up because that’s our second indication that the price bias is gonna follow through. But if we don’t get that price action, then no harm done. We’re not in the market anyway.
So, we’re looking for some price action down here; some change in cycle, which would suggest a pullback.
I wouldn’t look for any outrageous pull backs in terms of looking for the price to highlight back up to these highs. For instance, if this area breaks through, we can look at this zone here as well.
Keep an eye on GBP/AUD. This is definitely a chart I am interested in. It’s whether we are going to get that price action because of the strength of the AU Dollar.
In other news, in terms of other ideas, we got stuck for a very small loss, which is good since the price was showing that reversal on that daily timeframe.
So, we profited from GB Pound yet that took a very small loss on GBP/USD. Still, I was expecting the price to come up and retest this area. It has done so, and went further than I would have liked it to.
Just be very very cautious with this for our trend is still technically breaking through and it’s retesting this zone.
We’ll see how the price reacts to the highs. Once again, it is back at the range and if it can break to the downside, that would be fantastic. But nothing really major is going on here other than GBP/JPY and GBP/AUD both looking like good opportunities. So, I’ll leave you with that.
I hope you enjoyed this video update, and I’ll speak to you soon.
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