Hello traders! There is an interesting pattern going on with GBP/AUD currency pair. We can observe huge level of volatility during past weeks, with no directional clarity whatsoever. This seems like a trend might be getting ready for a long term reversal, from up, to down.
On the 4-Hour chart, there were two large spikes, where price attempted to go higher. Nevertheless, the price started to print lower lows and lower highs. We can see that 200 Exponential Moving Average was broken, along with the previous support at 1.9753. After that, GBP/AUD corrected up strongly but found the resistance at 38.2% Fibonacci retracement level, which is 2.0163
On the 1-hour chart about, we can see clearly, that today’s price bounced off the Fibonacci resistance and now breaking below the 200 EMA. Also, the pair reached the top of the descending channel, which has been successfully rejected. This suggest either a trend reversal or a very strong correction to the downside.
The key support is seen at 161.8% Fibonacci retracement level, applied to the corrective wave up, after breaking the 200 EMA on the 4H chart. This is a 1.9190 level, which previously was a supply and then a demand zone.
As long as GBP/AUD stays below the 2.0163, the downtrend is inevitable.
Bias: Strongly bearish while below 2.0163
Potential Resistance Zone: 2.0100 – 2.0160
Potential Targets: 1.9190
Have a profitable trading!