Stay short GBP/AUD on 'Double Top' and 'Bearish Divergence'
GBP/AUD is extending downside after formaing 'Double Top' at 1.80 levels.
We see bearish divergence from price action on RSI and Stochs which adds to the bearish bias.
The pair has slipped below 5-DMA and finds next major support on the downside at 20-DMA at 1.7569.
A decisive break below 20-DMA could see drag upto 100-DMA at 1.7316.
On the flipside, retarce 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 - 1.7568 (nearly converged 20-DMA and 23.6% Fib), 0.7483 (50-DMA), 1.7351 (Jan 29 low), 1.7316 (100-DMA)
Resistance levels - 1.7726 (5-DMA), 1.79 (Dec 1 high), 1.80 (Double top)
Good to go short on rallies around 1.77, SL: 1.7750, TP: 1.76/ 1.7570/ 1.7485/ 1.7320
We see bearish divergence from price action on RSI and Stochs which adds to the bearish bias.
The pair has slipped below 5-DMA and finds next major support on the downside at 20-DMA at 1.7569.
A decisive break below 20-DMA could see drag upto 100-DMA at 1.7316.
On the flipside, retarce 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 - 1.7568 (nearly converged 20-DMA and 23.6% Fib), 0.7483 (50-DMA), 1.7351 (Jan 29 low), 1.7316 (100-DMA)
Resistance levels - 1.7726 (5-DMA), 1.79 (Dec 1 high), 1.80 (Double top)
Good to go short on rallies around 1.77, SL: 1.7750, TP: 1.76/ 1.7570/ 1.7485/ 1.7320
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.
TP2 almost hit. Book partial profits at lows.
Trail SL to 1.77. Watch for break below 20-DMA for further weakness.