Hello Forex Traders,
The Forex market seems to be well aware of the upcoming FOMC news event. Yesterday price action of the Major currency pairs almost grinded to a slow halt during the day.
Of course the fact that the holiday season is so close does not help either and Forex traders should expect the pace of price action to slowly wind down up to year end.
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With the extra warning that price could go sideways up to the FOMC, let us take a look at the Aussie weakness.
The weekly chart shows how smooth and impulsive the uptrend has been behaving. The most recent break of the daily trend line (red) sparked yet another 1,000 pip rally. And the trend could easily continue.
There are no price action signals, clues or candles on the weekly chart that provide reasons to ponder about a potential halt or reversal of this uptrend. Week by week, the weekly candles are bullish candles with subsequent higher highs and higher lows, and also closes quite near the high.
Furthermore, when a Fibonacci retracement is placed on the middle part of the weekly impulsive prior to the bull flag chart pattern, then traders can see that price bounced off of the 38.2% retracement Fib. The main target of that Fib is the -0.272 at +/-1.58.
The slowdown in price movement becomes visible when zooming into the 1 hour chart. From a chart pattern perspective, this slowdown translates into a perfect forming triangle (purple) close to the top of an uptrend channel (blue).
Any break up is obviously a with-the-trend break out. This break could occur during the FOMC news event. If it happens during the holidays, then there is a high chance that there will not be sufficient follow through to push the break out scenario.
Any break down is counter trend and should find support at the bottoms (green lines) and bottom of uptrend channel (blue) for more upside continuation.
Also the GBPAUD has a similar structure on the hourly chart. Here too a triangle is forming during this consolidation phase. The same ideas, which were mentioned for the EURAUD, also apply for the GBPAUD:
Upside break is with the trend & downside break is counter trend.
Main and major difference with the EURAUD is that the GBPAUD already hit its -0.272 target at 1.8328. Also the AO has had a significant bend down and is now point slightly up, which usually means that the current trend is reaching an area of potential stall. The divergence on the CCI is confirming the same.
A bigger retracement could take place sooner or later. Until the trend fails to continue, never underestimate how far price can continue. Remember ride the tide, and bend with the trend. And the GA probably is due for more tide riding before the trend is fully ready to bend.
Did you trade the EURAUD or GBPAUD recently? Let us know if you did 🙂
Thanks for sharing and Good Trading!
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