GBP/AUD breaks below key support zone
|GBP/AUD traded lower on Wednesday, breaking below the key support zone of 1.8423, which supported the price action on Friday and yesterday. Overall, the pair continues to print lower highs and lower lows below the downside resistance line taken from the high of September 20th and thus, we would consider the short-term outlook to be negative.
The move below 1.8423 has confirmed a forthcoming lower low and may have encouraged the bears to push the action towards the 1.8357 barrier, marked by the low of July 7th. If they are strong enough to stay in charge and break that zone as well, then we could see them shooting for the low of the day before, at around 1.8253.
Shifting attention to our short-term oscillators, we see that the RSI turned down after it hit resistance at its 50 line and now looks to be headed towards the 70 line, while the MACD lies below both its zero and trigger lines, pointing down. Both indicators detect strong downside speed and corroborate the view for further declines in this exchange rate.
On the upside, we would like to see a clear recovery back above 1.8612, which is the peak of October 18th, before we start examining the case of a bullish reversal. This will not only confirm the break above the aforementioned downside line, but also a forthcoming higher high on both the 4-hour and daily charts. The buyers may soon touch the peak of October 8th, at 1.8672, where another break could carry more bullish implications, perhaps towards the high of October 6th, at 1.8765.
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