FxWirePro: GBP/AUD Technical, Market Profile Analysis and Trade Setup

Although GBPAUD sees some mild rally currently, the minor trend is still drifting southwards.

Market profile on 4H: 

Point of control (PoC) is at 1.8152, 

Unfair highs – 1.8158

Unfair lows – 1.8085

Value area (VA) – 1.8158 – 1.8116

21-SMA – 1.8128

7-DMA – 1.8123

RSI – Gaining strength at 37-38 levels, where the minor trend finds strength in the previous upswing.

The minor trend of the pair has failed at around the stiff resistance of 1.8174 levels quite a few times in the recent past, the prevailing interim upswings are likely to extend up to point of control but restrain below the stiff resistance levels.

If the market is balanced, it has already found the point of control which is the fair price, and that’s where it will equal number of options holders and writers. It is most likely to generate a trend day as the prevailing price likely to spike towards the PoC.

GBPAUD prices are finding some two-way price action around 1.8174 in the minor trend and at 1.8042 in major trend with divergence in the intra-day studies, we highlighted now unwinding. 

Back-to-back shooting star, hanging man & spinning top occurred at the stiff resistance, consequently, these bearish patterns plummet prices below SMAs with bearish crossovers, while both leading and lagging indicators are in tandem with the downtrend (refer 1H chart).

Intermediate trend spikes through the rising channel, Bears resume at channel resistance, current price slides below EMAs as both leading & lagging indicators signal weakness & bearish momentum (refer weekly chart).

Trade tips: One intraday trading grounds, at spot reference: 1.8107 levels, we advocate executing tunnel spread options strategy with upper strikes at 1.8158 and lower strikes at 1.8085 levels, the strategy is likely to fetch leveraged yields as long as the underlying price keeps sliding towards lower strikes on the expiration.

Alternatively, on hedging grounds, at spot reference: contemplating above factors, we advocate initiating shorts in GBPAUD futures contracts of July’19 delivery as further downside risks are foreseen and simultaneously, longs in futures of August’19 delivery. Thereby, one can directionally position in their FX exposures. The directional implementation of the same trading theme by further allow for a correlation-induced discount in the options trading also if you choose strikes appropriately.

Currency strength index: FxWirePro's hourly GBP is flashing at -35 (mildly bearish), hourly AUD spot index was at 46 (mildly bullish), while articulating (at 05:51 GMT). 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex