Is GBP/AUD set to dive again?

GBP/AUD traded lower during the Asian morning Tuesday, after hitting resistance near yesterday’s high of 1.8290. That said, the slide was stopped by the 1.8210 level, with the rate rebounding somewhat thereafter. Overall, the pair has been printing lower highs and lower lows below a downside resistance line since August 3^rd, and thus, we would consider the short-term outlook to be cautiously bearish for now.

If the bears are strong enough to push the pair below 1.8210 soon, we may see them aiming for Friday’s low, at around 1.8135. However, a break below that zone would make us more confident with regards to a trend resumption, as this would confirm a forthcoming lower low on both the 4-hour and daily charts. Such a dip may set the stage for extensions towards the 1.8054 obstacle, which is marked as a support by an intraday swing low formed on July 29^th.

Shifting attention to our short-term oscillators, we see that the RSI stands flat near its 50 line, while the MACD lies very close to both its zero and trigger lines. Both indicators suggest a lack of directional momentum and that’s why we prefer to wait for a strong dip below 1.8210, before we start examining the potential of more declines in this exchange rate.

On the upside, a strong rebound above 1.8290 would force us to abandon the bearish case. Such a move would also take the rate above the aforementioned downside resistance line and may initially open the way towards the peak of August 6^th, at around 1.8353. Another break, above 1.8353, could see scope for extensions towards the 1.8400 zone, fractionally below the peak of August 3^rd.

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