GBP/AUD Trades Above a Prior Downside Resistance Line | Technical Analysis

GBP/AUD traded lower on Wednesday, after it hit resistance near 1.8423. On Tuesday, the rate emerged above the downside resistance line drawn from the high of September 20th, and although it pulled back today, it stayed above that line. That said, we are reluctant to call for a bullish reversal yet. We prefer to wait for a break above 1.8423, marked by the high of November 3rd. Thus, for now, we will stay neutral.

If, indeed, we do see a rebound and a break above 1.8423, a forthcoming higher high will be confirmed and perhaps pave the way towards the high of October 22nd, at 1.8500, or the high of October 19th, at 1.8530. If neither barrier is able to stop the advance, then we may see extensions towards the peak of October 18th, at 1.8612.

Shifting attention to our short-term oscillators, we see that the RSI turned down after hitting resistance near its 70 line, while the MACD, although above both its zero and trigger lines, shows signs of topping as well. Although both indicators detect upside speed, the fact that they have turned down enhances our choice of waiting for a break above 1.8423 before examining the case for a bullish reversal.

The move that could trigger the resumption of the prevailing downtrend may be a return back below the downside line taken from the high of September 20th, or even better, a dip below yesterday’s low, at 1.8267. This could initially pave the way towards Monday’s low of 1.8190, or the low of November 2nd, at 1.8125. If the bears are not willing to stop there either, then we could experience declines towards the 1.8060 zone, marked by the inside swing high of May 4th.


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