GBP/AUD Analysis for favoured downside move GBP/AUD:
Beginning with the monthly chart, we can see that GA is currently resisting off of the 1.8500 zone which it has done in many previous tests. As well as this, we also have a support level on at around the 1.7300 level which in previous tests has proven to be a strong level of support especially.
Dropping down to the weekly chart we can now see the true strength of these two key monthly levels and can now start to get a grasp of what the market is actually doing. as we can see it is trading firmly within this range with strong rejection candles at both the roof and bottom of this important zone. We also have a new SR level which has become clear as we have dropped down to this timeframe at the 1.8000 level where price is currently sitting just above and has done for the past 3 weekly candles.
Now as we descend to the smaller timeframes where we would be looking for our final confluences on our preferred bias before stalking for an entry. On the daily timeframe we can now see yet another minor level has formed which, in recent tests has proven to be a strong level of resistance.
Now we drop down to the 4 hourly timeframe and can clearly see that we have an upward trendline which has been respected in many previous retests. We also have a significant SR level at the 1.8100 area, and it is at this area that I am looking for a bearish opportunity on this market as this, if this level is again rejected, it would form the second shoulder to the head and shoulders pattern and therefore add huge confluence to my already short bias. Furthermore, we have already seen a lower high formed on this timeframe which adds to the downside bias. If this entry is taken, then I would have a stop loss around 1.8117, however if the entry is taken upon a break and retest of the 1.8000 level we would set a stop loss at around 1.8020 and a profit target level at 1.7755 and then with a break of this level we are looking for a potential re entry and a continuation back down to the 1.7530 level.
