GBP/AUD tumbled yesterday, breaking two support (now turned into resistance) barriers in a row. That said, the pair hit support near 1.7865 and today it rebounded. The price structure on the 4-hour chart remains of lower peaks and lower troughs below the tentative downtrend line drawn from the peak of the 10th of October, as well as below the prior upside support line taken from the low of the 9th of August. Therefore, we would consider the near-term outlook to be negative for now.
We would expect the bears to take charge again at some point soon and perhaps aim for another test near the 1.7865 level. That said, in order to get comfortable with further declines, we would like to see a dip below 1.7820, a level that provided good support at the beginnings of September. A break below 1.7820 could set the stage for the1.7700 territory, marked by the inside swing highs of the 23rd and 24th of August.
Shifting attention to our short-term oscillators, we see that the RSI bottomed within its below-30 zone and moved back above 30, while the MACD, although negative, has bottomed as well and appears ready to drift above its trigger line. These signs suggest that some further recovery may be in the works before the next negative leg, perhaps for the rate to test the 1.8015 or 1.8065 barriers as resistances this time.
But even if the pair moves above 1.8065, we would stay cautiously negative, as it would still be trading below the aforementioned tentative downtrend line. We would like to see a clear break above 1.8265 before we start examining whether the bulls have gained control. Such a move could confirm the break above the downtrend line and could initially aim for the 1.8390 zone. Another break above 1.8390 could aim for the peak of the 23rd of October, at around 1.8455.
