- GBP/AUD shows break above 20-DMA at 1.63, intraday bias higher.
- The pair is trading in a downward sloping channel, but bullish Stochs divergence keeps scope for upside.
- Break above 20-DMA likely to see test of major trendline resistance at 1.6490.
- Violation at trendline finds next major resistance at 23.6% Fibo at 1.6513 and then daily cloud at 1.6567.
- Brexit deadlock over the divorce bills and downbeat UK macro news, in terms of the services and construction PMI reports continue to weigh down on the pound.
- Hence upside likely to be limited. We see bearish invalidation only on decisive channel top breakout at 1.65.
Support levels - 1.63 (20-DMA), 1.6284 (5-DMA), 1.6187 (78.6% Fib of 1.5789 to 1.76509 rally), 1.6075 (trendline)
Resistance levels - 1.6379 (Aug 31 high), 1.64, 1.6490 (trendline)
Recommendation: Good to go long on dips around 1.6330, SL: 1.6280, TP: 1.6380/ 1.64/ 1.6490.
FxWirePro Currency Strength Index: FxWirePro's Hourly GBP Spot Index was at 28.4071 (Neutral), while Hourly AUD Spot Index was at -54.4398 (Neutral) at 1040 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
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