British Pound is getting a lot of coverage in this blog. Reason is very simple - I trade it extensively. Pound is one of the most volatile currencies around, so virtually all its crosses show very big price movements. This creates opportunities for sizeable and quick profits, which attracts traders seeking above average gains, speculators and pure gamblers. I feel obligated to mention that losses tend to be as great, a double edged sword, if you will.
All of the liquid GBP pairs are traded here. GBP-JPY gets the most coverage, but even the more exotic crosses are featured from time to time. Just a week ago Pound was the focus of whole bunch of trades with good results. Crosses included GBP-CAD and GBP-NZD. They are not traded very actively, but rather selectively, when I deem probability for positive outcome to be above average. Besides, they are expensive to trade, with large spreads. It might not make difference for 1-2 trades, but over time it adds up, so careful selection of set ups is even more important here than some other trading instruments.
Another one of Pound pairs falling into that category is GBP-AUD. Few months ago in a post Strange chart I covered a possible long term buy. It never materialized, price kept falling without touching the buy level. In fact, price drifted below 2.0000 and approached an all time low from about 14 years ago. Pace of AUD advance started to slow down few weeks ago and now the market has characteristics of being in early stage of major reversal.

This weekly chart shows possible bottom forming. Volatility has dropped  to pre-crisis level, when Australian Dollar was severely punished, followed shortly after by a collapse of the Pound.  Price is slowly turning in a round fashion, which should prove to be a long term bottom. By that I mean at least few months, with price rising to about 2.2000 level.
This weekly chart doesn’t really offer an easily identifiable entry point, at least not the kind I’m looking for. For that daily chart is used.

Price has built somewhat of a saucer bottom formation. I’m not big on these kind of names like saucer or cup, and simply think about it as bottom reversal. An important resistance formed by 100 SMA has been touched. Chances are high that price will make another run at it and, eventually, break above. Given wide spreads and tendency of this pair to “spike”, I don’t want to get in just above this minor high, but rather a little later. My entry level is on a breakout past the previous minor high of about 2.0900, with a buy order at 2.0950. This should also insure that the price is firmly above 100 SMA, providing strong support. If all of this happens, objective is 1000 pips.
I don’t expect fast resolution here. It can easily be couple of weeks before the order is filled. However, British Pound is slowly gaining strength across the board, so this trade, if happens, should have a high probability of success.

Mike K.