If you’re looking for volatility and solid technical swing play setups, GBP/AUD may be the thing to watch with a near unbreakable range and top tier catalysts ahead for both the Aussie and Sterling!
GBP/AUD 4-Hour Forex Chart by TradingView
As we mentioned in yesterday’s technical analysis coverage of EUR/AUD, Australia is set to release its latest jobs data to likely get the Aussie moving this week, and Sterling is getting ready to rock with the last monetary policy statement of 2023 from the Bank of England on Thursday!
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on these events then it’s time to do some work by checking out the forex calendar and stay updated on daily fundamental news!
If you have done your fundies homework and got your biases and volatility expectations, then it’s time to move to the charts!
On the four hour chart above of GBP/AUD, we can see the market has been bouncing like a ping pong ball in a range for a while. This behavior actually goes all the way back to the beginning October, starting wide between 1.8900 to 1.9300, but more recently the range seems to be holding between the 1.9000 major psychological level to just under 1.9200.
This range is pretty tough as it’s survived monetary policy statements from both the Bank of England and Reserve Bank of Australia, and shifts in both sentiment and economic data.
So, the odds based on recent behavior are in favor of these areas of interest holding as range tops and bottoms for now, unless there is a major monetary policy sentiment shift from the BOE this week.
If you’re a bull on the pair, then the bottom of the range is the setup to watch for both a retest / bullish reversal patterns, and given that the top of the range is one daily ATR away, a shorter-term swing trade is something to consider as a part of the trade plan if the fundamentals support that outlook.
For the fundamental bears on the pair, we may see a retest of the top of the range with the market less than 50 pips away and major catalysts ahead. Much like the long setup, bearish reversal patterns from 1.9180 up to the and falling ‘highs’ pattern may draw in the bears and lead to a swing move lower to the bottom of the range.
But what do you think? Will the range hold once again around major catalysts? We love to hear everyone’s ideas on GBP/AUD so feel free to drop a comment below and share your thoughts!