GBP/AUD has been in a recovery mode since Wednesday, when it hit support at 1.8545. Yesterday, the pair broke the short-term downside resistance line drawn from the high of Aug. 20 and is now trading above a new upside line. With all that in mind, we will consider the short-term outlook to have turned slightly positive.
The rate is now headed towards the inside swing low of Aug. 31, at 1.8774, the break of which could pave the way towards the 1.8885 territory, defined as a resistance by the highs of Aug. 30 and 31. If the bulls are not willing to stop there, then we could see them aiming for the highs of Aug. 26 and 27, at around 1.8955.
Shifting attention to our short-term oscillators, we see that the RSI emerged above 50 and continued to drift higher, while the MACD lies above both its zero and trigger lines. Both indicators detect positive momentum and support further advances in this exchange rate. However, the RSI has just ticked down, which makes us careful that a small retreat may be looming before the next leg north.
On the downside, we would like to see a clear and decisive dip below 1.8530 before we start examining whether the bears are back in full control. This will confirm a forthcoming lower low on both the 4-hour and daily charts and may see scope for declines toward the low of July 9, at 1.8470, or the inside swing high of July 7, at 1.8430. If neither barrier is able to hold the rate from falling further, then the next level to consider as a support may be at 1.8355, marked by the low of July 7.