GBPAUD bounced up after it hit a 6 ½-week low of 1.7964 today as the RSI inched down to oversold levels, signaling that the recent downfall could be overstretched. The RSI is now back above 30 and is moving upwards, while the MACD is still in negative territory but is pushing up momentum to cross above its red signal line. Both suggesting that the pair could post further gains in the near-term.
However, looking at the simple moving average lines (SMA), the 20-period SMA continues to deviate below the 50-period SMA, therefore, despite any short-term rebound the broader trend could remain on the downside. This is also confirmed by the Ichimoku indicators as the red Tenkan-sen line shows no sign of pulling up to meet the blue Kjjun-sen line.
Should the pair stretch up, the 23.6% Fibonacci of 1.8085 of the dowleg from 1.8473 to 1.7964 could offer nearby resistance ahead of the 20-period SMA which currently stands at 1.8103. Even higher, the 38.2% Fibonacci of 1.8160 could be a stronger obstacle for the bulls to break through; this is the bottom of the March 3 – May 2 range-bound trading.
Alternatively, if the market weakens, support could come from the 1.7964 trough. Any violation of this point could extend the downward trajectory towards the 1.7900 psychological level.
