British pound offering opportunities in cross pairs

The GBP/AUD (FOREX:GBPAUD) pair fell during the session on Friday, but only retraced about half of the gains that we had accomplished on Thursday. The 1.80 level is massively supportive, so it is possible  there will be a nice buying opportunity if we can drift just a little bit lower. Keep in mind that we are at the end of the year, so of course liquidity becomes an issue in a pair that is already somewhat illiquid, although it does feature two major currencies.

The British pound has been favored against many of the world’s other biggest currencies, and the Australian dollar of course has been no different. After all, the Australian dollar has been absolutely pummeled against the U.S. dollar, which shows how weak the Aussie has become. On top of that, you have the gold markets looking extraordinarily weak, and you have a perfect scenario in which the pound should continue to appreciate against the Aussie.

Pullbacks should continue to offer buying opportunities.

Pullbacks will continue to offer nice buying opportunities in this particular pair. It is a nice trend, and it is without a doubt impulsive. That impulsive move suggests that we have much further to go as the type of move seen over the last several weeks is hardly a mistake. This is a market that has made up its mind as to which direction it wants to go, and therefore selling is absolutely impossible in this type of environment.

It would be great to see a pullback to the 1.80 handle with some type of supportive candle. That would scream "buy" to traders and so do not hesitate to do so. Alternately, if we break the top of the candle from the Thursday session, that's also a nice buy signal as well. Expect this pair to continue to have a reaction every 500 pips or so, as is typical with the British pound in general. Because of that, choose 1.85 as the next target for this market.

About the Author
Alp Kocak

Alp Kocak has been trading forex since 2003. He writes technical analysis based on Japanese candlesticks and Ichimoku Kinko Hyo and is a senior educator at FX Academy, where he provides trading strategies to traders at all levels.

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