Thursday, July 23, 2020

Bullish Divergence On GBPAUD

Marco Tosoni

FХ Strategist & Financial Commentator

Over the past three months, this pair has started a powerful bearish rally that has led the prices towards 1.7700 area without any significant technical correction, after setting the 2020 record around 2.0800 during the month of March with a distribution formation.

After a bearish acceleration on Tuesday, on yesterday’s session we had a first bounce with a closure around 1.7820 area and the formation of a hammer candle that could anticipate a further rising of the pound.

The Average True Range on is hand is continuing its decline, reaching a new yearly bottom and this element should anticipate an increase of the activity on this pair during the next trading sessions.

Looking at the RSI indicator, we can detect a perfect bullish divergence, that should favour a bounce of the pound, also considering the lack of rising swings during the last three months.

The setup would be activated in case of a breakout of yesterday’s top around 1.7900 area. The stop loss can be placed at 1.7650 below the weekly bottoms, while the target price can be expected at 1.8150 around the tops scored two weeks ago.

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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