Along with many AUD pairs, the GBP/AUD might also move in the direction of the strong Australian Dollar, and perhaps this will be the final wave to the downside.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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Trade Idea Details:
GBP/AUD symbol on the MT4 platform
Type: Bearish
Key support levels: 1.7900, 1.7865
Key resistance levels: 1.8020, 1.8120
Price Action:
On the 1h chart, GBP/AUD is trending down very consistently. Price continues to reject the downtrend trendline and remains below the 200 Exponential Moving Average. Currently, the price is right at the supply zone which could be very attractive for sellers.
The most recent bounce off the trendline was just today and perhaps it is the starting point of the downtrend continuation. On the other hand, GBP/AUD might attempt to move up and re-test the 200 EMA, which is a key resistance based on the 1h timeframe.
All-in-all, as long as the price remains below the 200 EMA GBP/AUD can be expected to move down toward the 1.7720 support level. This support is confirmed by 227.2% Fibonacci retracement level applied to the corrective wave up where previously price rejected the EMA.
The 1.7720 support corresponds precisely with the 61.8% Fibonacci retracement level applied to the overall uptrend on the Weekly chart. Therefore, there could be still a 225 pips downside potential in a relatively short period of time.
Potential Trade Idea:
Currently GBP/AUD is trading at 1.7945, which is just below the downtrend trendline. This could be a good entry point for sellers, although the price might spike up, to test the EMA. However, the downside target is at 1.7720, and in order to meet 1:2 risk/reward ration stop loss could be placed at 1.8054, which is clearly above the EMA.
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