GBPAUD Forex Forecast – Downtrend Correction Levels

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GBPAUD Forex Forecast - Downtrend Correction Levels
GBPAUD Forex Forecast - Downtrend Correction LevelsGBPAUD has been trending below a descending trend line on its 4-hour time frame and seems to be ready for a pullback. Price bounced off the 1.9300 area and might retrace to an area of interest near the trend line.
Applying the Fib tool on the latest swing high and low shows that the 61.8% level is closest to the trend line and former support around 2.0100. This is also near the 100 SMA dynamic inflection point. If this area holds as resistance, GBPAUD might make its way back to the previous lows or much lower.
The 100 SMA is below the longer-term 200 SMA, confirming that the selloff is likely to carry on. However, stochastic and RSI are still on the move up for now, which means that buyers are in control of price action. Once these oscillators turn down from the overbought levels, more sellers could push price down.
Earlier today, PMI readings from China came in mostly weaker than expected, reviving speculations of additional PBOC easing. The official manufacturing PMI fell from 49.4 to 49.0 while the non-manufacturing PMI dropped from 53.5 to 52.7 to indicate weaker industry expansion. The Caixin version of the manufacturing PMI declined from 48.4 to 48.0 to show a sharper pace of contraction.
Up ahead, the RBA is set to announce their interest rate decision and no actual changes are expected for now. In their previous statements, the RBA kept a steady bias but a shift to a more dovish stance could spur more Aussie losses.
As for the UK, PMI readings from the manufacturing, services, and construction sectors are lined up this week. Both the manufacturing and services industry could report weaker growth, which might feed into Brexit concerns for businessmen.

 

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

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