Who’s up for a simple pullback play today?
I’ve got this GBP/AUD textbook correction setup on my radar!
If you think the trend is still our friend on this pair, better keep your eyes on these potential support zones on the short-term time frames.
GBP/AUD 15-min Forex Chart by TV
GBP/AUD has been cruising higher with its rising lows connected by an ascending trend line that’s been holding since last week.
The pair looks prime for another test of support, which happens to coincide with the 61.8% Fib level, former resistance area, and S1 (1.9050) at a minor psychological mark.
Talk about confluence!
Technical indicators are pointing to trend continuation, too. The 100 SMA is above the 200 SMA to reflect bullish vibes, with the latter holding as dynamic support right around the area of interest.
Also, Stochastic is pulling higher after a quick dip to the oversold region, indicating that buyers are taking over while sellers take a break.
The oscillator has plenty of room to climb before reaching the overbought area, which means that GBP/AUD could have enough bullish pressure going for a test of the swing high at R1 (1.9230).
Sustained upside momentum could even take it up to fresh highs at R2 (1.9330) and beyond.
So far, weaker than expected Australian CPI and mostly downbeat updates from China are keeping a lid on AUD rallies. In contrast, the British pound is drawing some support from heightened BOE rate hike expectations stemming from stubbornly strong U.K. inflation.
China has another round of PMI readings coming up before the end of the week, so these might be enough to influence AUD trends and overall market sentiment.
In particular, stronger than expected figures for the month of June might dampen PBOC stimulus hopes and revive risk appetite. A break below the trend line or the key 1.9000 handle could be enough to invalidate GBP/AUD’s uptrend, so watch out for that!
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