FX TECHNICAL ANALYSIS
pair has made a significant recovery. The pair topped almost exactly at the 61.8% Fibonacci resistance of 1.3130, unable to test more powerful resistance
from the 26
month trend line at 1.3190. Risks do appear to be to the downside, lending support to our theory of a weaker US dollar. We have some very short-term support around the 1.2800 area but a break below here could see us with the testing the 100 and 200 day moving averages in the 1.2680/1.2650 area. Failure here adds pressure to the downside targeting 1.2470/1.2460 before a test of the low this year at 1.2246.
AUD/USD
The AUDUSD pair has been recovering in a gently upward sloping channel for over two years as you can see in the weekly chart (Chart 10). It
is a real two steps forward, one step back pattern but
Assuming this trend continues into 2018 we should find strong support at 0.7635/0.7615 where Bulls will step in and push the market back up to at least the January peak of 0.8135. Obviously to continue the slow but steady bull trend we must eventually break higher to target the upper trend line at 0.8200.
GBP/USD
The GBPUSD pair has staged a remarkable recovery since the BREXIT referendum result on 23 June 2016 (see Chart 11). On this day the market peaked at 1.5018, but was already trending lower from a peak of 1.1791 in 2014. The BREXIT shock pushed GBPUSD as low as 1.1450 in October 2016.
we had managed to recover over 1300 pips from 0.6824 up to a peak in January of 0.8135.
A slow but steady 16 month recovery has seen the pair recover 50% of the whole move lower as we achieve a peak in January of 1.4344. A relatively minor correction saw us hold the first 23.6% Fibonacci support of 1.3661 (we actually bottomed 50 pips above here
in
March) and we push back up to the 200 week moving average resistance at 1.4270/1.4280.
Clearly we have strong resistance from here up to the recovery peak of 1.4344, so bulls will need to sustain a break above here to commence the next leg higher in the recovery. We should quickly target 1.4515, 1.4575 & 1.4660. I see no reason why we cannot eventually reach 1.4740/1.4770 before that BREXIT vote peak of 1.5018. Worth noting the presence of very important 61.8% Fibonacci resistance just below here, at 1.4998. The equally important 500 week moving average
Chart 10: AUD/USD weekly
22 FX TRADER MAGAZINE April - June 2018
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