It seems the time has come for the British Sterling. Recently, the British Sterling (GBP) has started an uptrend against all majors and minors. The current TCI trading signal involves GBP against the Australian Dollar. The Australian Dollar (AUD) is very weak against all majors during this period, especially versus GBP, EUR, and USD. But before presenting more data on GBPAUD, we should, as always, evaluate our previous signal. The previous signal concerned EURUSD and other popular pairs (23rd of May 2013).

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📶 Evaluating the Previous TCI Forex Trading Signals

In our previous analysis, we mainly focused on EURUSD, indicating an upcoming uptrend. At that time, EURUSD traded at 1.2850. Today, after two weeks, EURUSD is at 1.3217, delivering an impressive return for derivative traders. Regarding the other signals, we correctly forecasted the movements of USDJPY and USDCHF but incorrectly predicted the trends for GBPUSD and EURNZD.

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📈 British Pound Sterling against the Australian Dollar

The Australian Dollar (AUD) is currently very weak against all majors, a trend expected to continue over the next few weeks, assuming neutral news. In this Forex trading signal, we focus on the British Pound Sterling (GBP) against the Australian Dollar (AUD). The reason is that the British Pound is close to its historical lows against the Australian Dollar, indicating strong support below. The trading signal points to the following target profit and stop loss levels:

◘ GBPAUD Currently: 1.6374(*)

◘ GBPAUD Mid-Term Trigger: when 1.6480 breaks for sure

◘ GBPAUD Target Profit: 1.6900 (mid-term)

◘ GBPAUD Stop-Loss: 1.6320, 1.6280 (short-term) and finally 1.6180 (mid-term)

(*) If you are not an experienced Forex trader, it is highly recommended to wait for the 1.6480 level to clearly break before opening a position on GBPUSD.

In any case, upcoming news will play a major role. If the news is good or neutral, we expect GBPAUD to follow the forecasted path in an aggressive uptrend. If not, we could see it drop to 1.6180. Below that level, the master trend should be considered bearish again. In the following MT4 chart, we can see the GBPAUD performance over the past three years (2010–2013).

Chart: GBPAUD Daily Closing (2010–2013)

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🔄 Historical High/Low

Using Forex data from the period 1992–2013, we identify the following levels:

• High: 3.0000 | Low: 1.4350 | Pivot: 2.2175

Today, GBPAUD is trading around 1.6380, which is far from its historical high and very close to its historical low. From a long-term perspective, we could see GBPAUD moving toward its pivot level at 2.2175.

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🎚️Trading Leverage and SWAPs When Trading GBPAUD

The ideal level of trading leverage is the level that does not force you to place a tight stop-loss order. For example, using trading leverage 100:1 will require placing a very close stop-loss to manage potential losses, exposing your position to ‘market noise’. Trading leverage should be seen as both a friend and a potential enemy. For mid-trend trades, consider using leverage around 30:1. However, large positions are also subject to higher swap charges.

🔗More: The Optimal Trading Leverage Formula

The Difference in Interest Rates Between the Sterling and the Australian Dollar

The GBP annual interest rate is 0.50% (recently unchanged), with inflation at 2.40%, while the AUD has an annual rate of 2.75% with inflation at 2.50%. This results in a swap value of approximately $17 per lot per day (based on my STP broker).

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📊 GBPAUD Crucial Short-Term Levels (Support & Resistance)

-1.8135 (Very Strong Resistance)

-1.7610 (Strong Resistance)

-1.7250 (Average Resistance)

-1.6910 (Weak Resistance)

-1.6475-1.6480 (Very Strong Short-Term Resistance)

-1.6380 (Weak+ Recent High)

-1.6290 (Weak+ Recent Low)

-1.6190-1.6240 (Strong Support)

-1.6150-1.6100 (Average –Recent High)

-1.5880 (Average –Recent High)

-1.5780 (Average Impact -Variable Trend Line)

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⚙️ TCI Data Table

TCI on GBPUSD indicates an overbought market, but also one with a tendency to continue moving upward before a strong correction occurs. In any case, upcoming news will play a major role. If the news is good or neutral, we expect GBPAUD to follow the forecasted aggressive uptrend, potentially reaching as high as 1.6900.

Table: GBPAUD Market Data and TCI

Date	Close	High	Low	Volume	Δ (%)	Volat.	TCI
2013.06.06	1.62445	1.63322	1.61316	180,358	0.08%	1.2%	1.84%
2013.06.07	1.63737	1.64778	1.62412	196,200	0.09%	1.5%	1.93%
							1.92%
							2.30%
							2.25%
							1.96%
							1.63%
							2.02%
							2.09%
							2.23%

The British Pound against the US Dollar

GBPUSD could move upward in the coming months. However, this movement is not forecasted by the current signal, especially at a time when significant fundamental news is expected from both the British and, more critically, the US economy.

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📝 Important Note for All Traders – Nobody Can Predict the Short-Term Market Course

Financial markets cannot be predicted with certainty, particularly in the short term. However, in some cases, market direction can be forecasted using a probability-based model. If the probability of a trend forming exceeds 60–70%, the signal can become highly profitable. This is the foundation of our Forex Trading Signals. The upcoming week is expected to bring unpredictable news events that may impact the accuracy of the current GBPAUD trading signal. Nevertheless, the key point is the potential emergence of a mid-term uptrend in GBPAUD. Any corrections along the way could present favorable trading opportunities—provided the timing is right.

 

■ Giorgos Protonotarios, Financial Analyst

for Trading Center, Free Forex Trading Signals (GBPAUD) -Sunday, the 9th of June 2013, before opening