GBP/AUD traded lower today, dipped briefly below 1.8650, but rebounded somewhat and at the time of writing is hovering again near that barrier. Overall, the rate continues to trade above the upside support line drawn from the low of July 30th, but since October 16th, it’s been in a corrective mode, trading below a short-term downside resistance line. Thus, although the broader path is still to the upside, we believe that the current correction may continue for a while more.
The bears may take charge again soon and push towards the low of October 14th, at around 1.8515, the break of which may allow extensions towards the 1.8430 area, marked by the inside swing high of October 10th. If they don’t stop there either, then we could see them sailing further south, towards the aforementioned upside line, or the low of October 11th, at 1.8275.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50 and points down, while the MACD stands below both its zero and trigger lines, pointing slightly lower as well. Both indicators detect negative momentum and support the notion for the current correction to continue for a while more.
On the upside, we would like to see a break above 1.8810 before we start examining that the retreat has ended earlier. Such a move would also confirm the break above the short-term downside line taken from the peak of October 16th, and may initially pave the way towards the 1.8925 territory, which provided strong resistance between October 18th and 24th. If the bulls are strong enough to overcome that zone, they may decide to push towards the high of October 17th, at 1.9015, or the high of the day before, at around 1.9090.
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