GBP/AUD Neckline Retest (February 14, 2014)
After that hawkish BOE inflation report, GBP/AUD made a strong break above the neckline of the double bottom pattern earlier this week. However, after finding resistance at the 1.8600 handle, the pair looks ready to make a quick pullback before resuming its climb.
On the 1-hour time frame, the neckline and former resistance is between the 38.2% and 50% Fibonacci retracement levels. Stochastic is making its way out of the oversold zone, which means that pound bulls are ready to push the pair back up.
Going long at the 38.2% Fib with a stop below the 50% Fib level and a target around 1.8600 could yield at least a 2:1 return on risk.
By Kate Curtis from Trader's Way