GBP/AUD Bounces off 200-Day SMA as Carney Stirs the Action

Technical Sentiment: Bullish

 

Key Takeaways

• AUD eases across the board as the week draws to an end;
• The sterling pound sees massive buying as BOE Gov Carney hints Interest Rate hikes will come sooner than expected;
• GBP/AUD 200-Day Moving Average bounce favors another bullish upswing;

BOE Governor Carney’s comments ignited the action on Thursday, a perfect timing for GBP/AUD as the pair was treading the 200-Day Moving Average. The subsequent bounce formed a large Bullish Engulfing bar. Although the bullish price action pattern has already been confirmed and played out accordingly, GBP/AUD remains in bullish territory and further gains are expected early next week.

 

Technical Analysis

GBP/AUD returned above the 1.8000 handle and the 50-Day Moving Average during the Asian and European sessions, and appears set to test the next resistance at 1.8136 during the US session or early next week. Since early April the pair has been forming a bullish swing configuration of Higher Highs and Higher Lows. With Thursday’s 200-Day SMA and support bounce, traders may soon be looking at a fresh High above 1.8332.

GBP/AUD is currently trading into the 100 and 200 Simple Moving Averages on the 4H time frame (1.8060-74), with immediate resistance at 1.8136 in the form a price pivot zone and 61.8% Fibonacci Retracement between 1.8332 High down to Low of 1.7820. Further up the 100-Day Moving Average is descending near 1.8200. Small dips are expected as price hits these resistance levels, yet they should be seen as buying opportunities.

Dips could target the 50-Day Moving Average (1.8032) at first. Stop losses are accumulating between 1.7980-1.8000, consequently this area should mark the lowest support level in the current uptrend.

*********
Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets