GBPAUD at most important resistance since 2020

9 de dez.

The GBP/AUD pair shows a notable pattern on the daily chart, displaying a clear uptrend that has persisted since July 2024, characterized by rising lows but encountering resistance at the 2.000 level. Recently, the price approached 1.9967, a significant resistance level not seen since 2020. This level is pivotal, not just as a historical high, but also as a key psychological barrier near the round number of 2.000. Following this resistance testing, the price has begun to exhibit signs of weakness, indicating a potential reversal or at least a short-term correction.

Current Market Context

The bullish trend has been backed by a distinct ascending trendline connecting the key lows. However, as the price neared the 1.9967 resistance, candles with long upper shadows emerged, signaling rising selling pressure.

Potential Sell Opportunity: Close Below 1.9735

A close below 1.9735 would result in a Bearish Engulfing pattern, where a bearish candle completely covers the previous bullish one, indicating a shift in market sentiment toward sellers. In this context, closing below 1.9735 would validate this pattern and support a potential sell-off.

Characteristics of the Potential Sell Trade:

• Entry Point: Approximately 1.9730 (upon a close below 1.9735).
  
• Stop Loss: 2.0010, above the recent high, to guard against false breakouts.
  
• First Target: 1.9350 (380 pips away), aligning with significant support from November, where the price faced strong rejection previously.
  
• Second Target: 1.9150 (580 pips away), corresponding to an even stronger support level, reinforced by the long-term ascending trendline.
  

Risk-Reward Ratio:

• Risk: 280 pips (from 1.9735 to the stop at 2.0010).
  
• Reward:
  
• First Target: 380 pips (Risk-Reward Ratio: 1.35).
  
• Second Target: 585 pips (Risk-Reward Ratio: 1.52).
  

This scenario presents an attractive opportunity for traders seeking a short-term trend reversal.

Scenario: Breakout of 2.000 Resistance

Conversely, if the price breaks and closes above 2.000, this historical resistance would be invalidated, potentially allowing the uptrend to continue. In this case:

• Entry: Close above 2.000.
  
• Stop Loss: 1.9900, positioned below the broken resistance to protect against retracements.
  
• First Target: 2.0100 (90 pips from the entry), a significant psychological level likely to attract market interest.
  
• Second Target: 2.0250 (240 pips from the entry).
  

Signals Against Selling:

• A breakout candle with increasing volume above 2.000.
  
• Sustained closes above the resistance, indicating buying momentum.
  

In this scenario, the bullish structure would resume, with buyers regaining control.

Summary

The GBP/AUD pair is at a critical juncture. A Bearish Engulfing pattern following a close below 1.9735 could present a viable sell opportunity, supported by clear targets and a favorable risk-reward ratio. Conversely, a break above 2.000 could pave the way for new highs, sustaining the uptrend. Traders should closely observe price movements in the upcoming sessions to determine the likely outcome.

Disclaimer:

74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Past performance is not necessarily indicative of future results. The value of investments may fall as well as rise and the investor may not get back the amount initially invested. This content is not intended for nor applicable to residents of the UK.