The GBP/AUD pair pullback during the session on Friday for the second day in a row, but quite frankly I think this is only going to offer buying opportunities going forward. After all, we have broken out to the upside significantly from the 1.80 level, and it now appears that the 1.82 level could be next support area based upon the couple of neutral candles we had last week. Because of this, I am actually looking to start buying around that area, on the first signs of support. The fact that it is Christmas week suggests to me that we should probably be paying attention to shorter time frames as the liquidity will be dry.
However, this pair is somewhat illiquid at times already, so that illiquidity that we see this week could actually make the move more significant. Because of that, we could get a sharp move higher. I would be really surprised however, to see this pair fall for any significant amount of time.
Watch the gold markets.
Watching the gold markets will be important as well, because it will give you an idea of the value of the US dollar, the Australian dollar, and then ultimately this pair. The gold markets pierced the $1200 an ounce level during the session on Thursday, and although it did rise back above and on Friday, it didn’t necessarily do it in a convincing manner. Because of that, I believe that the gold markets will be like an anchor around the neck of the Australian dollar in general.
However, we need to pay attention to the 1.80 level as well. We could possibly pullback to that level in in a highly illiquid environment, and there is a shooting star on the weekly chart. Nonetheless, the 1.80 level looks to be far too important to expect any type or break down anytime soon. Because of this, I’m still positive of this pair, but do recognize that this pullback is not only needed, but probably healthy as well for the buyers as well as the sellers as no market go in one direction forever.
