GBP/AUD Trades At Resistance Pivot Ahead of BoE Meeting

GBP/AUD Trades At Resistance Pivot Ahead of BoE Meeting

Forex Technical Update

GBP/AUD daily chart 5/9/2012 3:10PM EDT

The GBP/AUD has been in a strong bull run from about 1.4550 during 2/15 up to 1.6050 at the end of the 5/9 US trading session. The daily chart shows the market pushing above a channel in the previous few sessions, now testing a resistance pivot from 11/23/2011. This 3-month rally has come with an increasing acceleration.

Only in the 1H chart do we see any signs of deceleration. As the market push at the 1.6050 area there is a bearish divergence forming with the RSI. If the market is to top off even in the short-term, it needs to fall below the 1.60 handle, and clear the 1.5980 short-term support pivot.

The next risk event for the sterling is the Bank of England meeting at 7:00AM 5/10/2012. The most important focus should be on the Asset purchase program, which is going to run out at the end of the month. The market is not expecting the central bank to extend another 25B, or 50B as they did February 9. So if there is more stimulus, the increasing-money-supply effect should weigh on the Sterling.

There is also a risk event at Wednesday 9:30 PM EDT 5/9/2012 â€" the Australian employment data for April. Poor employment data might help GBP/AUD push through the current 1.6050 resistance. The next resistance pivot is around 1.6350 where the market topped of in August and October of 2011.

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Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes â€" provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

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