Wednesday, May 27, 2020

Bullish Divergence On GBPAUD

Marco Tosoni

FХ Strategist & Financial Commentator

After the wide trading range developed in March between 1.99 and 2.07, during the month of April a bearish rally started, bringing the quotes right below the bottoms of November 2019 around 1.85 area, without significant corrections, excepting the flash bounce set between the last session of April and first of May.

During yesterday’s session after setting a new bottom nearby 1.8480, a doji candle was formed with a closure around 1.8540 area.

Looking at the RSI indicator we can detect a perfect bullish divergence, that should represent a reliable anticipation of a bounce of the Pound around an important support area, at least with a short-term outlook. The Average True Range continues to decline as we have seen throughout the month of April and May, so it’s currently working around the 2019 levels.

The bullish setup would be activated in case of a breakout of the weekly top at 1.8700, with a stop loss to place at 1.8400 below last November bottom area. The target price on the other hand could be expected around 1.9000 area nearby the bottom set on last April.

As always I recommend to trade carefully and to plan at best every move. Don’t forget to subscribe to NBHM YouTube Channel to stay up to date with the financial markets! Have a good trading and see you for the next video

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