GBP/AUD rebounds on 20-day SMA; erases bearish rally in the near term.
GBP/AUD has rebounded somewhat on the 20-day simple moving average (SMA) and on the 23.6% Fibonacci retracement level of the upward movement from 1.5725 to 1.8730 around 1.8015. The price is ready to snap the five consecutive red days from the 1.8520 resistance, driving the price higher again.
From the technical point of view, the MACD oscillator now suggests that the market sentiment might get worse before getting better, however, the RSI is reverting back to the upside after the pullback on its 50-neutral threshold. The stochastic also looks to be changing direction, moving up in the oversold territory.
Should the price edge higher, the 1.8520 level which the bulls were unable to break in the previous week could provide resistance. Moving higher, the focus will shift to the more than two-year high of 1.8730 restrictive area, while more advances would push the pair to create a higher high in the medium term.
However, in case of a downward movement below the 23.6% Fibonacci mark, the market could find support near the 40-SMA currently at 1.7900. If there is a successful penetration below this line, the next supports would come from 1.7610 and the 38.2% Fibonacci of 1.7575. In case of a significant rally lower the price could challenge the ascending trend line around 1.7450.
Overall, GBP/AUD has been trading within an upside rally since October 2016, creating higher highs and higher lows during this period.
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