As part of our #SundaySetups we are taking a look at the good old British Pound versus the Aussie Dollar. Unlike our gold setup we are sticking to our 4 hour favoured time frame and highlighting the formation of a Cup pattern on our trading view chart and potential break out higher for the pound.
So looking at our chart we started last week in a consolidation pattern with many market participants out for Easter holidays, by Wednesday we had a strong break out higher after data from Australia and since then we have had a lower higher lower lows pattern forming. The key part of this however is that we had a bounce and close above support around 1.8315 then a close higher on the daily and weekly. Now since 8th of April we have started to form a Cup pattern, a U shaped pattern forming over the 2 week pattern with periods of consolidation and closing with a strong break higher followed by a series of lower highs and lower lows forming the handle part of a cup. When cup patterns form the handle part is followed by a breakout higher- in this case we would be looking for a retest of upper resistance around 1.8460 to 1.85 providing upside of 150 pips.
Secondly on front we have been able to close above 50 since last Monday and maintaining this into early part of next week gives further confidence to the idea that the pair are due to break higher towards that 1.85 . However we would look for confirmation of this both on front and crossover and turning higher before pulling the trigger on a long.
As everyone is well aware British pound is dominated by political headlines around Brexit and a (never ending story of) potential leadership change within the Conservative party so capital at risk has to be reduced to account for a higher risk of the unknown.
As always this is not a trade recommendation and simply technical observation.
Good luck trading
from the Team at forexTrdr
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