Technical Analysis – GBPAUD consolidates, finds traction on lower band of cloud


Anthony Charalambous, XM Investment Research Desk

GBPAUD adopted a sideways mode after a fresh high of 1.8404, creeping into the Ichimoku cloud where it found some positive footing on the floor of the cloud at 1.8174. The horizontal demeanour of the Ichimoku lines and the 50-period simple moving average (SMA) suggest a ranging market could hold for a while longer.

Nevertheless, the short-term oscillators and the 50- and 100-period SMAs endorse an improving picture. The MACD and its red trigger line have merged marginally above the zero line, while the RSI is trying to advance further into bullish territory. Moreover, the stochastic oscillator is positively charged with the %K line nearing the 80 mark.

Should buyers clearly drive above the cloud, initial resistance could emanate from the 1.8323 and 1.8351 nearby highs. Acquiring further ground, a tough resistance border from the fresh peak of 1.8404 until the 1.8423 barrier – from mid-June – may attempt to halt the climb from stretching towards the 1.8454 key obstacle.

Otherwise, if sellers push under the red Tenkan-sen line, early support could occur at the 50-period SMA at 1.8231, where the blue Kijun-sen line lies. If the pair continues to weaken, the bears may test the cloud’s bottom at the 1.8174 low, before the 100-period SMA at 1.8150, and the critical 1.8136 trough, not far beneath. Steeper declines may then be challenged by the 1.8107 barrier, prior to the 200-period SMA at 1.8078, followed by the adjacent 1.8060 border.

Summarizing, GBPAUD appears stuck between the boundaries of 1.8404 and 1.8136. Despite the prevailing broader negative bias, very short-term optimism could form with a break above 1.8454.