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The GBP/AUD currency is an exotic currency offering song trends and many opportunities for technical pattern traders. While the pair has been trending downward for most of 2011, today we are looking at the potential of a price channel being formed with an upward bias. Traders will use a number of technical cues such as support and the SSD indicator to determine entry timing. Channels are drawn by first finding support and resistance. Support can be found by matching up our lows. Currently our lowest low was printed on July 28th at 1.4759. We can match this point up with the September 7th and October 18th lows to form the base of our channel. Resistance is drawn by using a parallel bar marking off our highs in a similar fashion.
After finding support and resistance, we can now begin to look for entry’s on our channel. Adding the SSD Indicator (Slow Stochastics) with a 15, 5, 5 setting can be useful for finding shifts of momentum. Traders looking to buy the GBP/AUD will look for the %K line to close above the %D line. For more on this oscillator read, Stochastic Crossovers , linked here. 
My preference is to buy the GBP/AUD using conformation from the SSD indicator. Entrys should be placed as near resistance as possible at 1.5450 or better. Stops should be placed 200 points away outside of resistance at 1.5250. Limits should look to first target half the channel at 1.5850 for a clear 1:2 Risk/Reward setting. Secondary limits may be placed at the channel high at 1.6250 Alternative scenarios include price breaking through support and moving on to new lows. Additional Resources Support and Resistance Video Trading Stochastics Video Chart Patterns and the Trend ---Written by Walker England, Trading Instructor To contact Walker, email wengland@fxcm.com. Follow me on Twitter at @WEnglandFX. To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to wengland@fxcm.com. 
The GBP/AUD continues to be one of the most graphically impressive downtrends in the Forex market. From the July 2010 high at 1.8140 the pair has trended lower to 1.4758 established on July 28th of this year. Despite moving over 3300 pips lower in the last twelve months, this week has brought upon new buying from news out of the RBA (Reserve Bank of Australia). 
Price Action Moving to a 4H chart, price has noticeably retraced against its long standing trend. As price tests resistance near 1.5540, we will begin looking to resume looking for selling opportunities. Using the CCI oscillator, we can wait for the indicator to turn under the +100 (overbought) levels to indicate a turn in price. Only at this point will we look to resume trading with the trend. 
Trading Opportunity My preference is to sell the GBP/AUD on a turn of the CCI indicator under the +100 signal line. Entrys should be placed as near as possible to resistance at 1.5540. Stops should be placed at 1.5680 or better. Limits should target 1.5260 at minimum looking for 280 pips profit, setting up f a clear 1:2 Risk/Reward ratios. Alternative scenarios include price continuing to trade between our triangle lines. Walker England contributes to the Instructor Trading Tips articles. To receive more timely notifications on his reports, email wengland@fxcm.com to be added to the distribution list.