GBP/AUD slid on Wednesday, after hitting resistance near 1.8240 on Tuesday. The 1.8240 hurdle appears to be the upper bound of a sideways range that’s been in place since Nov. 4, with the lower boundary seen at around 1.7977. Thus, even if we see further declines, as long as the rate stays within that range, we would consider the short-term picture to be neutral.
In order to start examining the bearish case, we would like to see a dip below 1.7970. This would confirm the downside exit out of the range and may initially pave the way towards the 1.7846 barrier, which is defined as a support by the low of Oct.1. Another break, below 1.7846, could extend the decline towards the low of Sept. 22, at around 1.7700.
Taking a look at our short-term oscillators, we see that the RSI has just touched its toe back below 50, but the MACD remains fractionally above both its zero and trigger lines. Both indicators stand near their equilibrium lines, and although they somewhat contradict each other, this means that the pair is lacking strong directional speed, adding to our choice of staying sidelined for now.
The move that could wake up the bulls may be a break above 1.8240. This could initially open the way towards the peak of Nov. 23, at 1.8315, the break of which could extend the rally towards the high of Nov. 3, at 1.8375. If the buyers do not stop there, the next possible resistance level may be at around 1.8470, marked by the high of Nov. 1.