Technical Analysis GBPAUD : 2019-01-25

[IFC Markets]

Slowing private sector expansion in Australia bullish for GBPAUD

UK’s labor market data improved while Australia’s private sector expansion slowed. Will the GBPAUD continue gaining?

Latest economic data from UK were positive while Australia’s data deteriorated. UK unemployment rate declined to 4% in November from 4.1%, and average earnings growth accelerated to 3.4% from 3.3% in October. At the same time the 20.8 thousand of unemployment benefits claims in December was below the 28.4 thousand claims in November. In Australia business activity expansion slowed in January: Markit’s Composite PMI index declined to 51.5 in January from 52.9 in December, readings above 50.0 indicate expansion. And while the unemployment unexpectedly down-ticked to 5% in December from 5.1%, it was due to increase in part-time work which offset a decline in full-time employment. Weaker Australian data while UK data improved are bullish for GBPAUD.

On the daily timeframe the GBPAUD: D1 is retracing to three-week high.

• The Parabolic indicator gives a buy signal.
• The Donchian channel indicates uptrend: it is widening up.
• The MACD indicator gives a bullish signal: it is above the signal line and the gap is widening.
• The RSI oscillator is rising and has not breached into overbought zone yet.

We believe the bullish momentum will continue after the price breaches below lower boundary of Donchian channel at 1.8521. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed above the last fractal low at 1.7917. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (1.7917) without reaching the order (1.8521), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary


Position Buy
Buy stop Above 1.8521
Stop loss Below 1.7917