GBP/AUD is currently printing fresh 2 ½-month lows, extending the downtrend off 1.8724 below the Ichimoku cloud and the 200-day simple moving average (SMA). The short-term bias is still negative as the MACD continues to fluctuate in bearish territory and below its red signal line, with the red Tenkan-Sen line adding further bearish signals as the indicator points strongly to the downside. Yet the RSI suggests that the pair is near oversold levels and hence an upside correction could be around the corner; the indicator is set to cross below its 30 oversold level.
In case the market shows recovery, resistance is expected to come around 1.7950, slightly below the 50% Fibonacci retracement of the up-leg from 1.7282 to 1.8724. This area has proved to be a strong barrier to upside and downside movements over the past 12 months, therefore it could attract immediate attention. Further up, bullish actions may stretch towards the 38.2% Fibonacci of 1.8168, while a beat at this point could drive the price towards the 1.8380-1.8473 region, identified by the 23.6% Fibo and the highs seen in April. It’s also worth noting that this zone encapsulates the upper surface of the Ichimoku cloud.
On the other hand, additional declines may push the price towards the 78.6% Fibonacci of 1.7587 before the 1.7500 round level comes into view. If the obstacles fail to hold, the focus will shift to the 1.7400 support.
Turning to the medium-term picture, the positive outlook has significantly deteriorated towards a neutral one following the peak at 1.8724. With the pair now trading below the Ichimoku cloud and the 50-day MA losing steam, the picture could worsen even further.
Overall, GBP/AUD is bearish in the short-term, while in the medium-term the outlook turned to neutral.
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