At the time of writing, GBP/AUD is the top mover today, rightly so. Pound is pressured by political turmoil in the UK. Everybody knows it. Aussie is boosted by strong employment data, and optimism over US-China trade negotiation.
Following up on our last note on GBP/AUD here. The rebound off 61.8% retracement of 1.7282 to 1.8726 at 1.7863 was out of our expectations. But GBP/AUD failed to take out 1.8156 resistance anyway and maintained bearishness. And finally, this 1.7863 fibonacci support is taken out firmly today.
The development now adds to the case of medium term bearish reversal. That is, whole “corrective” up trend from 1.5626 (2016 low) has completed at 1.8726 on after missing 50% retracement of 2.2382 to 1.5626 at 1.9004. This is also supported by bearish divergence condition in weekly MACD.
Deeper decline should be seen back to 1.7282 key support level first. Decisive break there will pave the way back to 1.5626 in medium term. And there is prospect of even resuming the down trend from 2.2382 (2015 high) through 1.5626 low in the long term. For now, this will be the preferred case as long as 1.7824 support turned resistance holds.
