- GBP/AUD has taken support at 20-DMA at 1.7577 and edged higher to currently trade at 1.7597 levels.
- We see this as a temporary pause and break below 20-DMA will see further weakness.
- The major is extending downside after forming 'Double Top' at 1.80 levels. Bearish divergence from price action on RSI and Stochs supports the bearish bias.
- Focus now on CPI and Friday’s retail sales along with a number of speeches from senior Cabinet ministers.
- An uptick in core CPI could be read as a sign that demand-pull inflation is on the rise and hence may yield rally in GBP.
- That said, Brexit concerns could still cripple any advances made, weighing on the pair.
- Next major support below 20-DMA is seen at 50-DMA at 1.7478 ahead of 100-DMA at 1.7321.
- On the flipside, retrace and close above 5-DMA could see the pair re-test 1.80 levels. We see bearish invalidation only on decisive break above 1.80 levels.
Support levels - 1.7577 (20-DMA), 0.7478 (50-DMA), 1.7351 (Jan 29 low), 1.7321 (100-DMA)
Resistance levels - 1.7698 (5-DMA), 1.79 (Dec 1 high), 1.80 (Double top)
Call update: Our previous call (https://www.econotimes.com/FxWirePro-Good-to-short-GBP-AUD-on-Double-Top-and-bearish-divergence-1144990) has almost hit TP2.
Recommendation: Book partial profits, trail SL to 1.77. Watch for break below 20-DMA for further weakness.
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