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The British pound collapsed against most major currencies during this past week, including the Australian dollar. The GBPAUD pair fell sharply and traded as low as 1.7876 where buyers emerged to hold the downside. The fundamentals were mostly in favour of the Australian dollar in the short term, but this might change at any time. Earlier during the Asian session, the Australia’s New Motor Vehicle Sales data was published by the Australian Bureau of Statistics. The outcome was a disappointing one, as the Australia’s New Motor Vehicle Sales fell by 1.3%, compared to the gain of 2.2% last time.
There is an important bearish trend line formed on the hourly chart for the GBPAUD pair. The pair is currently trading around the mentioned trend line and struggling to break it. The most important thing to note here is that the 100 moving average and 38.2% fib retracement level of the last drop from the 1.8140 high to 1.7876 low just sit above the bearish trend line. So, the 1.7975-80 levels are very critical for the pair, as a break above the same might ignite sharp gains in the pair. In that situation, the pair could climb towards the 200 moving average, which also coincides with the 61.8% fib level.
Alternatively, if the pair fails to break above the resistance area, then it might fall back towards the last low of 1.7876. It would be tough for the Aussie buyers to take the GBPAUD pair below the last low, but if sellers fail to defend then a move towards the 1.7820 level might be possible.
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Overall, buying with a break or selling with a tight stop can be considered in the short term.
Posted By IKOFX Technical Team: Online Forex Broker