GBPAUD Forex Forecast – Daily Trend Line Pullback

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GBPAUD Forex Forecast - Daily Trend Line Pullback

GBPAUD Forex Forecast - Daily Trend Line Pullback

GBPAUD has been climbing recently but the longer-term downtrend on the daily time frame remains intact. Price has traded below a descending trend line and might be due for a pullback to this falling resistance area.

Using the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with the trend line and 100 SMA. This moving average is below the longer-term 200 SMA so the downtrend is likely to carry on.

In addition, stochastic has already reached the overbought area so buyers might be feeling exhausted from the climb. RSI is also nearing overbought conditions so sellers might jump back in the game and push for a move to the previous lows at 1.8200 or lower.

Earlier in the week, data from Australia came in weaker than expected as the quarterly CPI showed a 0.2% decline versus the projected 0.3% uptick. Producer prices also showed a 0.2% drop instead of the estimated 0.2% gain while private sector credit came short of expectations at 0.4% versus 0.5%.

Meanwhile, there have been no major reports out of the UK recently but there has been some unwinding of pound shorts now that Brexit fears are subsiding. Data from the UK in the previous week has also been mostly disappointing and business PMI readings are up for release next week.

But before that, Chinese PMI readings are due over the weekend and this could dictate how market sentiment might fare. Another batch of improvements could usher in demand for the Aussie, as this would mean stronger demand for Australia’s commodity exports.

The RBA is set to give their monetary policy statement next week and no changes are expected, although the central bank could take a more dovish tone now that data has been disappointing. Lack of action could inspire an Aussie rally, similar to the price reaction from the BOJ and RBNZ statements.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.