Technical Analysis – GBPAUD correction might have legs
- GBPAUD in the red again today
- Both BoE and RBA have refrained from cutting rates
- Momentum indicators are inconclusive at this stage
GBPAUD is trading slightly lower today, within the busy 1.9440-1.9521 area, and close to the recent peak of 1.9699. GBPAUD has managed to break below both the July 10, 2024 trendline and the 50-day simple moving average (SMA), but a stronger correction is needed to validate this move. Interestingly, these two currencies are among the strongest ones in the FX space in September, as their respective central banks have refrained from following the Fed into cutting rates.
In the meantime, momentum indicators are mostly mixed. More specifically, the Average Directional Movement Index (ADX) is tentatively trying to climb to its midpoint and signal the presence of a weak bearish trend in GBPAUD. Similarly, the RSI continues to aimlessly hover around its midpoint. Additionally, the stochastic oscillator is edging lower, a tad below its midpoint, but appears unable to stage a protracted correction.
Should the bulls remain confident, they could try to lead GBPAUD above the busy 1.9440-1.9521 area that is populated by the December 16, 2019 high, the 50-day SMA and the 61.8% Fibonacci retracement of the August 17, 2023-December 27, 2023 downtrend. If successful, they could then have a go at overcoming the 78.6% Fibonacci retracement at 1.9672 and record a higher high.
On the flip side, the bears would welcome a series of red candles and a successful break below the 1.9440-1.9521 area. They could then come up against the busy 1.9267-1.9300 area, which is defined by the 50% Fibonacci retracement and the 100- and 200-day SMAs. A move below this region could reverse the recent bullish momentum and allow the bears to test the support set by the 1.9114-1.9183 area.
To conclude, GBPAUD is edging lower but some key support levels have to be broken for the bears to regain the upper hand.
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