Who’s to play Simple Undo today?
I’ve got the GBP/AUD textbook correction setup on my radar!
If you think that the trend is still our friend in this pair, you’d better keep an eye on these potential support areas on the short-term timeframes.
GBP/AUD 15-minute forex Planned by TV
The GBP/AUD has been surging higher with its bullish bottoms connected to a steady ascending trendline since last week.
The pair looks good for another test of support, which coincides with the Fibonacci level of 61.8%, the previous resistance area, and S1 (1.9050) at a secondary psychological mark.
Talk about a confluence!
Technical indicators also indicate a continuation of the trend. The 100 SMA is above the 200 SMA to reflect a bullish reaction, with the latter holding as dynamic support around the area of interest.
Also, the stochastic is rising higher after a quick drop into the oversold territory, which indicates that the buyers are in control while the sellers are taking a break.
The oscillator has plenty of room to rise before reaching the overbought zone, which means that the GBP/AUD might have enough upward pressure to test the swing top of R1 (1.9230).
Continued bullish momentum may lead to new highs at R2 (1.9330) and beyond.
So far, weaker-than-expected Australian CPI and downbeat updates from China are keeping a lid on the Aussie’s gains. In contrast, the British Pound is receiving some support from the Bank of England’s interest rate hike expectations which stems from the strong inflation in the UK.
China has another round of PMI readings coming before the end of the week, so these may be enough to influence Aussie trends and overall market sentiment.
In particular, the stronger-than-expected numbers for June could dampen the People’s Bank of China’s hopes for stimulus and revive risk appetite. A break below the trend line or the major handle 1.9000 could be enough to negate the upside for GBP/AUD, so watch out!
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