AUDGBP snaps to lowest close since June 11th
Australian Dollar/British Pound (AUDGBP) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 7th day in a row, AUDGBP finished the month -1.94% lower at 0.5459 after losing 35 pips (-0.64%) today on high volume. Today's close at 0.5459 marks the lowest recorded closing price since June 11th. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (AUDGBP as at Jul 31, 2020):
Friday's trading range has been 54 pips (0.98%), that's above the last trading month's daily average range of 42 pips. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for AUDGBP.
One bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on July 23rd, AUDGBP lost -0.31% on the following trading day.
After having been unable to move lower than 0.5453 in the prior session, the currency found buyers again around the same price level today at 0.5447.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day though could signal a potential change in momentum that might lead to a correction back up towards the center of the Bollinger Bands at 0.5545.
Although the forex pair is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Further selling might move prices lower should the market test June's close-by low at 0.5390.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "7 Consecutive Lower Closes" stand out. Its common bearish interpretation has been confirmed for AUD/GBP. Out of 8 times, AUDGBP closed lower 75.00% 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 75.00% with an average market move of -0.58%.