AUDGBP closes above its opening price after recovering from early selling pressure
Australian Dollar/British Pound (AUDGBP) Technical Analysis Report for Feb 17, 2020 | by Techniquant Editorial Team
AUDGBP ended Monday at 0.5163 gaining 17 pips (0.33%) on low volume. Trading up to 8 pips lower after the open, the currency managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (AUDGBP as at Feb 17, 2020):
Monday's trading range has been 23 pips (0.45%), that's far below the last trading month's daily average range of 45 pips. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for AUDGBP.
Buyers managed to take out the key technical resistance level at 0.5157 (now S1), which is likely to act as support going forward. The pair found buyers again today around 0.5147 for the third trading day in a row after having found demand at 0.5143 in the previous session and at 0.5147 two days ago. The last time this happened on January 24th, AUDGBP actually lost -0.84% on the following trading day.
Although the forex pair is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Selling could speed up should prices move below the close-by swing low at 0.5143 where further sell stops might get activated. As prices are trading close to February's high at 0.5218, upside momentum could accelerate should the FX pair mark new highs for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Low close to prior two Lows" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for AUD/GBP. Out of 172 times, AUDGBP closed lower 53.49% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 58.72% with an average market move of -0.08%.