The technical dominance as mentioned in our previous report proved to be true once again, as we always emphasize that market respects the technical levels way more than its fundamentals. The euro plunged by around 80 points against the U.S. dollar on Tuesday. Even the German ZEW economic sentiment beat the expected figures for the past month.
Now those who are waiting to trade the GBP/USD and AUD/USD, get ready now as the market may start falling for both these pairs. Check out how and why.
The pair has been falling this month where it is currently trading in a short-term bearish channel and would remain a good opportunity for the sellers as long as it trades below the critical resistance level of 1.6020. Currently, the pair is trading at 1.5977 where it has strong resistance present at 1.5992 and 1.5994 where its 100-days EMA on its 1-hourly chart. Those who want to risk less and play safe could sell the pair with a stop loss set at 1.6035 and if the bears manage to breach the triple bottom support area of 1.5910 then it is going to be an alarming situation for the British pound that could take it down to 1.5750 within a week or two.
I have mentioned several times before that the price action theory works the best on this pair, where other technical indicators often fail at times. Even this pair does not really respect its own fundamentals, but when it comes to price action you have to stick as to what is being shown in the charts.
I request all the traders to kindly check the DAILY chart of the Aussie where you would see a shooting star, indicating that bears might start entering from now on and could drag the pair down yet again after a month or so where bulls enjoyed much. Moreover, there is a double top resistance level at 0.9540 area, which is the same level that the pair tested in early September and then bounced back down. Sellers may enter at this level anytime soon, where you could set your stop loss at 0.9560 with a medium term bearish rally that could go down to 0.9277.
To contact the reporter of this story: Jonathan Millet at email@example.com