New day but similar story across multiple G10 forex pairs with many at extreme oversold levels whilst at resistance levels and the market questioning if the moves continue or we see a reversal. One such pair is British Pound versus Australian Dollar .
We had entered this pair yesterday but poor data out overnight on Australian building permits took the pair through our stop loss but since then we have had results out of British local elections which are pointing to the electorate being extremely fed up with the two major parties around Brexit. Conservatives in particular have had a very poor result which will only result in more pressure mounting for the party to remove May as Prime Minister. A such British pound has been heading lower since the Aussie permits data.
We are looking for British pound to continue to head lower pulling back from extreme overbought levels and levels which are some 50-60pips above where the is. As per our chart work on trading view you can see both and stochastics at extreme overbought levels and additionally the turn down starting to occur. We specifically waited for this for confirmation that the pair is heading lower to minimise the downside risk.
Market is also expecting to hear a positive outcome from US and Chinese trade talks next week with CNBC runnign multiple stories of a positive conclusion expected by the end of next week.
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