The GBP/AUD pair is one of my favorite pairs to trade in all honesty. That's because it tends to form very technical ranges that you can trade from, which is something you see quite often in the more exotic pairs. This is because they tend to be a little less liquid, so there's only a handful of major players in the market, and they tend to dictate where the market moves at certain intervals.
As you can see on the chart, I have the 1.6650 level market as support, and the 1.75 level marked as a potential target. This is because we are obviously in an uptrend, and have taken a slight pullback. If we can get above the 1.70 handle, I do believe that we will make it to the 1.75 handle over the course of November. It makes sense, because the British pound has done fairly well over the longer term, while the Australian dollar has been beat up. If you find some type of tertiary indicator for this market, look at the GBP/USD and AUD/USD pairs. Simply figure out which one is stronger, and by currency. If both of them are falling, then it becomes a little bit more complicated, and you move on to a different market. However, if the British pound is doing better than the Australian dollar against the US dollar, then it stands to reason that this pair will continue to go higher. Over the last several months, this has been the case.
Taking a rest, hanging out in consolidation.
The fact is that we are simply taking a rest after a massively parabolic move. That's not unusual, and the beauty of this is that we know there's more of a tendency to go higher than lower, and we also have a nice consolidation area carved out from which to trade. With that being the case, it's a simple matter of playing the most likely scenario, which at this moment seems to be that we continue to go higher, and try to breakout above the 1.75 handle. Whether or not we do is completely different question, but we have 500 pips between here and there to figure that out. That is more than enough room for me to start buying.
