GBP/AUD tumbled on Friday, after it hit resistance at 1.8020 on Thursday. Overall, the rate appears to be trading within a sideways range between the aforementioned barrier and the support 1.7790. So, despite today’s tumble, as long as the pair stays within the range’s boundaries, we will take a neutral approach.
In order to start examining the bearish case, we would like to see a decisive dip, not only below the lower bound of the range, at 1.7790, but also below the 1.7765 level, which is marked as a support by the inside swing highs of Jan. 25 and 26.. This will confirm a forthcoming lower low on the daily chart and may initially pave the way towards the low of Jan. 25, at 1.7684. If that barrier is not able to stop the decline, then its break may see scope for extensions towards the 1.7590 territory, marked as a support by the low of Jan. 21.
Taking a look at our short-term oscillators, we see that the RSI runs below 50 and points down, while the MACD, although slightly positive, lies below its trigger line and points down as well. It would turn negative soon. Both indicators suggest that some further declines may be in the works, but as we already noted, we prefer to wait for the downside exit out of the aforementioned range before we get confident on that front.
Now, for the picture to turn bullish, a break above the range’s upper end, at 1.8020, may be needed. This, accompanied by a break above the peak of Dec. 8, at 1.8047, may set the stage for advances towards the 1.8213 level, marked by the high of Dec. 4, the break of which may trigger extensions towards the peak of Nov. 23, at 1.8315.