Happy Monday traders, the market is open!
This week I am looking at a potential AB=CD pattern on the GBP/AUD. With this pattern our retracement falls between 0.5 and 0.618- specifically 0.567. Technically this is slightly closer to the latter, which would give us an ideal extension of 0.618. A 0.5 retracement would give us a preferred extension of 0.2, so I have drawn up both levels to provide you with a better visual of the potential reversal zone.
Originally drawn on the 4 hour chart, the angle of our extension from C to D is identical to that of the AB wave. The timescale of the wave are also very similar with only 4 candles between them! When looking at price as a percentage, our original drop from A to B is 3.22%, while the projected extension comes in at 3.32%. AB=CD patterns should be as symmetrical as possible- however rarely perfect, we keep them as close as we can!
Our PRZ lands on a level where price has turned from resistance to support which can be seen clearly across the 4 hour and daily charts! (see below). Price is currently entering a level where our weekly chart saw consolidation before continuing its bull run back in 2014. This is definitely an area to watch the GBP across all pairs!
Looking ahead into this week and next week we have the AUD trade balance being released, as well as GBP CPI and GDP. As per usual the consensus is generally already priced in already, but we should be conscious of any surprises in the announced figures.
AB=CD ratios are as follows:
C: 0.382-0.886
D: 1.13-2.618
Risk with this trade will be at 3:1 and I will update as the pattern progresses!
This week I am looking at a potential AB=CD pattern on the GBP/AUD. With this pattern our retracement falls between 0.5 and 0.618- specifically 0.567. Technically this is slightly closer to the latter, which would give us an ideal extension of 0.618. A 0.5 retracement would give us a preferred extension of 0.2, so I have drawn up both levels to provide you with a better visual of the potential reversal zone.
Originally drawn on the 4 hour chart, the angle of our extension from C to D is identical to that of the AB wave. The timescale of the wave are also very similar with only 4 candles between them! When looking at price as a percentage, our original drop from A to B is 3.22%, while the projected extension comes in at 3.32%. AB=CD patterns should be as symmetrical as possible- however rarely perfect, we keep them as close as we can!
Our PRZ lands on a level where price has turned from resistance to support which can be seen clearly across the 4 hour and daily charts! (see below). Price is currently entering a level where our weekly chart saw consolidation before continuing its bull run back in 2014. This is definitely an area to watch the GBP across all pairs!
Looking ahead into this week and next week we have the AUD trade balance being released, as well as GBP CPI and GDP. As per usual the consensus is generally already priced in already, but we should be conscious of any surprises in the announced figures.
AB=CD ratios are as follows:
C: 0.382-0.886
D: 1.13-2.618
Risk with this trade will be at 3:1 and I will update as the pattern progresses!
