Hello there traders,
I hope your trading has been going well this week. In today’s blog we will take a quick look at how the XAUUSD has progressed since our last 2 articles. We also take an intensive look at the GBPAUD. If there is any currency pair that you would like to discuss, then please let us know by writing a comment down below in the comment section. 🙂
So a quick recap of XAUUSD. The day chart is showing a down trend with lower highs and lower lows. This is of course classical technical analysis and no rocket science is needed.
The more important question you probably will be asking yourself is: will we first break the bottom or top?
Considering the fact that we are in a downtrend with 4 waves complete, the statistical probability is in favor of a break of the bottom.
Of course there is never a 100% guarantee in life, nor do we find it trading.
We do have the following facts:
1) Impulsive move down in 5 waves
2) Move up was in 3 waves and respected the Fib retracements
3) Price action reversal signs at current price levels
Let us see if Gold does move down its Golden path down!
The next currency which seems interesting to me is the GBPAUD. We can see that the GBPAUD has made a huge move down since 2008.
The GBP lost close to half of its value in comparison to the Aussie. An amazing bear run for multiple years.
The bearish mode has been quite silent in more recent history. Since summer 2011 the currency pair has been moving sideways in a range. The value of the bottom side is around the 1.45-1.47 mark. The upper boundary on the week chart is around the 1.60-1.62, although recent price action on the day chart has been making lower lows.
If we draw a trend line connecting the bottoms, we will see that there is still sufficient space to the bottom of the wedge line. However, if we exclude the wicks of the second bottom and attach it to the third bottom, then maybe this is already the bounce?
Zooming into the 4 hour chart shows us that we had divergence when moving downwards. That divergence has caused the currency to move up in a 3 wave pattern.
The big question is: will we go up to the top of the wedge or are we heading down to break the bottom?
It is difficult to tell which of the scenarios will play out. There is no divergence with making the new highs. That could favor a continuation of the up move.
I will be waiting for the break of the top or bottom to decide whether I want to trade this currency. A break of the 4 hour low will indicate more downside to me. A break of the 4 hour top would indicate more upside to me.
A hook back and retest of the broken top or bottom is of course always the best and preferred scenario.
I wish you Good Trading!
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