Amid all the chaos in today’s equity markets, we have also seen some intense volatility in the Forex market in recent trading sessions. Some traders cite the relentless march of the EUR/USD higher was the big news in the currency market. However I think even the more interesting news is that some of the commodity crosses touched, broke, tested some major levels on the crosses. For example, the GBP/NZD finally tested (and held) a massive downtrend line and inverted H&S target today. Read this post from May of this year.
Another pair that I find extremely interesting is the GBP/AUD. What you will notice is that we have tested (and held) a major Fibonacci resistance level today on a weekly basis.This pair has been a fun long trade in recent months but may struggle with some resistance as seen below:
I believe three things currently that could weigh on this pair. 1) The GBP currency has been drug (tooth and nail) higher with the EUR’s rise against commodity and emerging market currencies. 2) I believe the EUR/USD is due to correct from its recent rise which may lead to a correction in the GBP. 3) I think stocks have the ability to bounce in the coming days, which tends to lend support to commodity currencies like the AUD, which may also lend to a correction of the GBP/AUD.
Chief Currency Strategist, Wizetrade