Hi Traders! GBPAUD short term forecast update and follow up is here. On September 5th 2023 I shared this “GBPAUD Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H1 chart, currently we have a strong bullish momentum and based on the Heikin Ashi candles we can see that currently, we have strong bullish bodies in upward moving market conditions so it basically reflects a strong bullish environment as well. In addition to this, we could see that the price which is moving higher has created higher highs based on the MACD indicator, which is a sign of gaining momentum towards the bullish side. In addition to this, the ADX indicator gave a bullish signal here at the cross of +DI (green line) versus -DI (red line) and the main signal line (silver line) reads value over 25, we may consider this as yet another evidence of bullish pressure. Currently, it looks like a correction is happening, also we had two strong resistance zones that have formed and the price which is moving higher has broken above these zones and is holding above them. After the breakout, these strong resistance zones are acting as two strong support zones for us. So based on all this, until both these strong support zones shown in the image below (marked in green) hold my short-term view remains bullish here and I expect the price to move higher further after pullbacks.
Based on the above-mentioned analysis my short-term view was bullish here and until the two strong support zones hold I was expecting the price to move higher further. The price action didn’t follow my analysis here and this idea failed. After the higher highs, the price which was moving lower reached the first strong support zone but the price didn’t hold in this zone as I expected it to. The price then moved lower further and we got a valid breakout below the second strong support zone as well thus invalidating the bullish view here. My current view on this pair is neutral.
So traders, this is why I wanted to show this example to help you understand why we should always trade based on the facts and hints provided by the market and take the right actions according to that. Even though we had various facts supporting the bullish view here, the price didn’t hold in the two support zones as I expected it to and broke below them, which is a contradictory sign provided by the market opposing the bullish view. Also, you should keep in mind that losses are part of trading we can’t expect every trade to go as per our plan and provide us profits. In trading, we can’t avoid losses but in order to be successful in trading, we should know how to cut losses early and how to manage the trade when the price goes in the opposite direction.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
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