Technical Analysis – GBPAUD looking oversold within descending channel
Posted on November 7, 2019 at 2:55 pm GMT
Christina Parthenidou, XM Investment Research Desk
GBPAUD strengthened negative momentum on Thursday to stop at the bottom of the descending channel, where the 200-period simple moving average (SMA) in the four-hour chart and the 50% Fibonacci of the upleg from 1.8074 to 1.9092 happen to be at the moment.
The RSI is a shy above its 30 oversold mark and therefore traders may shift their attention towards the upper surface of the channel currently around the 38.2% Fibonacci of 1.8700 if the price reverses to the upside. Clearing that barrier, the bulls would aim for the 1.8800-1.8850 area and then for the 1.8928 level.
On the downside, the 1.8520 level could provide nearby support if selling pressure picks up steam under the channel, while a steeper decline could meet a wall somewhere between 1.8430 and 1.8400. Retracing lower, the 1.8300 number could be the next target.
Meanwhile in the bigger picture, GBPAUD continues to trade in an uptrend despite the sell-off from the 1.9092 peak and only a decisive close under 1.8520 would resume neutrality.
Summarizing, GBPAUD is looking oversold in the four-hour chart, with the 1.8700 level expected to act as immediate resistance in case the price rebounds. In the bigger picture, the positive outlook is likely to remain in place as long as the market keeps trading above 1.8520.