GBP AUD enters weekly zone, what next?
Hello traders and analysts,
Below see the original idea dated: January 1st 2021.
Master Key:
Blue = Monthly
Purple = weekly
Orange = Daily
Grey = 4hour
Pink = 1 hour
Below is an explanation of the imbalance/inefficiency zones based upon the original analysis view.
1. Zone 1: - 1.72 - 1.75
we will be looking at a test of the order block, movement away to keep shorts flowing to keep the imbalance moving towards the zone of a 1.72 redistribution, liquidity to show bears further short options before the lows.
From here we will expect a spring and a test of said springs.
A rejection will occur and then see accumulation phase of price hitting the target on the AUD USD with bullish Aussie.
2. Exactly the same but making further gains moving down to 1.67-1.60 which will be the development.
We volume will be a key indicator here to see the set up of the buy/sell swaps.
What has happened since?
Price has tested the inefficiency zone with a double bottom of 1.742X lows- but on a weekly chart against the ray trend line, this has created a false breakout for the bears - which is exactly what was needed to identify the imbalance shift from sellers to buyers. The imbalance zone is highlighted blue to represent the monthly zone due to the price hitting monthly lows, so from here the buyers took over.
Long Positions held:
Position 1: - 1.74550
Position 2: - 1.77200
Monthly imbalances:
Pretty simple breakdown from a monthly perspective, where GBP maxed out in March 2020 and began the sellers imbalance to reach lows of 1.742 as previously stated above.
From a buying retrace imbalance - the targets are set at the 1.87 mark and 1.93 the next target. From a positional buy into 2022 if the 50% monthly Fibonacci retracement permits the target and holds above, then extension of 2.0X will be looked towards.
Daily chart imbalance
Here is the price chart for the daily chart and the previous idea of tracking the update
Correlation of GBP AUD vs AUD USD
Imbalance spotting is important to note on one pair like GBP AUD, however the web behind the imbalance is just as important to keep in mind when looking for imbalance trades as pairs are called pairs for a reason.
Looking into two variables where correlation is either Perfect positive correlation +1, 0 [No correlation] or Perfect negative correlation -1 i in simple Lehman's terms.
Comparing the GBP AUD to the AUD USD - using a monthly correlation grid.
The current at time of analysing is -79.7% negatively correlated. This has been due to the weak USD in play and the positive correlation against the SPX500 and the USD associated with the index. XAU is also a factor here whereby XAU a hedge against inflation and a propulsion for the Aussie to provide further additional strength.
Here is the graphical scale below:
Where by the inverse of the AUD from 0.80 and a low of GBP AUD to 1.768XX, the opportunity arises for short positions and respective longs for the GBP.
AUD USD peaking at the imbalance of 0.80
Below is the AUD - USD rising to the imbalance of 0.80
Here provides a clearer view as to why the GBP vs AUD is ranging between a 300pip range, based upon a strong GBP and a strong AUD
Why the previous analysis pointed to 0.80 as a selling pivotal point using imbalances.
The DXY is pivotal
DXY to see the imbalance reverse upon the devaluation of the USD where the FED has created an abundance of credit which has financed the citizens essentially to 'stay put' in cases whereby specific industry sectors within the US are rendered 'useless' until the hospitality and entertainment, aviation can all be kick started again.
Below are the pivotal monthly imbalances on the chart which are hard to not notice. The Monthly imbalances clearly indicate where the profit targets for the DXY are as price has clearly rejected.
Use this monthly imbalance analysis to help trade in a higher time frame.
SPX vs AUD USD - with an importance note of GBP AUD.
The correlation of the SPX and the Aussie is a positive correlation when the SPX is bullish , this allows the AUD USD to remain bullish . With respect for USD purposes where the SPX becomes bearish from an imbalance or has a trend breather, the correlation becomes a sell imbalance for the SPX and AUD based upon the USD having the fundamental safe haven positional stance for investors.
Using Yields and the Volatility index to provide further evidence.
Be aware of the Yields of the US05 - US20 Year, this can impact the SPX growth and AUD Bullish correlation.
Do you enjoy the setups?
If you like the idea, please leave a like or comment.
To all the followers, thank you for your continued support.
Thanks,
Team LVPA MMXXI
Below see the original idea dated: January 1st 2021.
Master Key:
Blue = Monthly
Purple = weekly
Orange = Daily
Grey = 4hour
Pink = 1 hour
Below is an explanation of the imbalance/inefficiency zones based upon the original analysis view.
1. Zone 1: - 1.72 - 1.75
we will be looking at a test of the order block, movement away to keep shorts flowing to keep the imbalance moving towards the zone of a 1.72 redistribution, liquidity to show bears further short options before the lows.
From here we will expect a spring and a test of said springs.
A rejection will occur and then see accumulation phase of price hitting the target on the AUD USD with bullish Aussie.
2. Exactly the same but making further gains moving down to 1.67-1.60 which will be the development.
We volume will be a key indicator here to see the set up of the buy/sell swaps.
What has happened since?
Price has tested the inefficiency zone with a double bottom of 1.742X lows- but on a weekly chart against the ray trend line, this has created a false breakout for the bears - which is exactly what was needed to identify the imbalance shift from sellers to buyers. The imbalance zone is highlighted blue to represent the monthly zone due to the price hitting monthly lows, so from here the buyers took over.
Long Positions held:
Position 1: - 1.74550
Position 2: - 1.77200
Monthly imbalances:
Pretty simple breakdown from a monthly perspective, where GBP maxed out in March 2020 and began the sellers imbalance to reach lows of 1.742 as previously stated above.
From a buying retrace imbalance - the targets are set at the 1.87 mark and 1.93 the next target. From a positional buy into 2022 if the 50% monthly Fibonacci retracement permits the target and holds above, then extension of 2.0X will be looked towards.
Daily chart imbalance
Here is the price chart for the daily chart and the previous idea of tracking the update
Correlation of GBP AUD vs AUD USD
Imbalance spotting is important to note on one pair like GBP AUD, however the web behind the imbalance is just as important to keep in mind when looking for imbalance trades as pairs are called pairs for a reason.
Looking into two variables where correlation is either Perfect positive correlation +1, 0 [No correlation] or Perfect negative correlation -1 i in simple Lehman's terms.
Comparing the GBP AUD to the AUD USD - using a monthly correlation grid.
The current at time of analysing is -79.7% negatively correlated. This has been due to the weak USD in play and the positive correlation against the SPX500 and the USD associated with the index. XAU is also a factor here whereby XAU a hedge against inflation and a propulsion for the Aussie to provide further additional strength.
Here is the graphical scale below:
Where by the inverse of the AUD from 0.80 and a low of GBP AUD to 1.768XX, the opportunity arises for short positions and respective longs for the GBP.
AUD USD peaking at the imbalance of 0.80
Below is the AUD - USD rising to the imbalance of 0.80
Here provides a clearer view as to why the GBP vs AUD is ranging between a 300pip range, based upon a strong GBP and a strong AUD
Why the previous analysis pointed to 0.80 as a selling pivotal point using imbalances.
The DXY is pivotal
DXY to see the imbalance reverse upon the devaluation of the USD where the FED has created an abundance of credit which has financed the citizens essentially to 'stay put' in cases whereby specific industry sectors within the US are rendered 'useless' until the hospitality and entertainment, aviation can all be kick started again.
Below are the pivotal monthly imbalances on the chart which are hard to not notice. The Monthly imbalances clearly indicate where the profit targets for the DXY are as price has clearly rejected.
Use this monthly imbalance analysis to help trade in a higher time frame.
SPX vs AUD USD - with an importance note of GBP AUD.
The correlation of the SPX and the Aussie is a positive correlation when the SPX is bullish , this allows the AUD USD to remain bullish . With respect for USD purposes where the SPX becomes bearish from an imbalance or has a trend breather, the correlation becomes a sell imbalance for the SPX and AUD based upon the USD having the fundamental safe haven positional stance for investors.
Using Yields and the Volatility index to provide further evidence.
Be aware of the Yields of the US05 - US20 Year, this can impact the SPX growth and AUD Bullish correlation.
Do you enjoy the setups?
- 10 years combined analysis experience in capital markets
- Focus on technical output not fundamentals
- Position and swing trades
- Provide updates where necessary - with new updated ideas tracking the progress.
If you like the idea, please leave a like or comment.
To all the followers, thank you for your continued support.
Thanks,
Team LVPA MMXXI
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