GBPAUD has been on a climb recently but bulls seem to be getting exhausted, as a reversal pattern can be seen. On the 1-hour time frame, price formed a double top formation with the neckline around the 1.7200 major psychological level.
A break below this support area could confirm the potential selloff, which might last by around 200 pips or the same height as the chart formation. This could take GBPAUD down to support at the 1.7000 mark. On the other hand, a bounce off the neckline could lead to the formation of another top at 1.7400.
The 100 SMA is still above the 200 SMA for now so the path of least resistance might still be to the upside. However, the gap between the moving averages is narrowing so a downward crossover is imminent, likely drawing more sellers to the mix.
Stochastic is on the move up but appears to be changing direction midway, possibly indicating a return in selling pressure. RSI is still heading north so bulls could still have a chance to push for more gains, possibly even a break above the tops and a stronger uptrend.
Medium-tier reports are due from the UK today, namely the net lending to individuals and mortgage approvals figures. Earlier today Australia reported a stronger than expected gain in building approvals, suggesting a pickup in construction sector activity.
Bigger market movers such as the Australian retail sales report and Chinese PMI readings aren’t due until Thursday. Stronger than expected data could lower the chances of a rate cut from the RBA in their next policy meetings, which might be enough to revive AUD strength. On the other hand, disappointing figures could lead to easing expectations and more losses.