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FxWirePro: GBP/AUD holds support at daily cloud, weakness only on break below

  • GBP/AUD is holding strong support at daily Ichi cloud, we see weakness only on break below.
     
  • Sterling showed muted reaction to UK manufacturing PMI which eased more than expected.
     
  • Data released earlier today showed  UK manufacturing PMI eased to 56.3 in December as against 58.0 expected and previous month's reading of 58.2.
     
  • The pair has formed spinning top at lows and price action is currently holding above 5-DMA at 1.7271.
     
  • The pair has broken major trendline support at 1.7425 and we see scope for further downside.
     
  • Technical studies on weekly charts are biased lower. RSI and stocks have rolled over from overbought levels.
     
  • 20W SMA at 1.7073 is next major support, break below will accentuate weakness.
     
  • Scope then for test of 1.6863 (61.8% Fib retracement of 1.61625 to 1.79966 rally).

Support levels - 1.7253 (cloud top), 1.7073 (20W SMA), 1.6895 (Nov 2 low), 1.6863 (61.8% Fib retrace of 1.61625 to 1.80 rally)

Resistance levels - 1.73, 1.7368 (Nov 1 high), 1.7482 (20-DMA), 1.7492 (June 1 high)

Recommendation: Watch out for break below daily cloud to go short.

FxWirePro Currency Strength Index: FxWirePro's Hourly GBP Spot Index was at 7.1022 (Neutral), while Hourly AUD Spot Index was at 4.88868 (Neutral) at 1000 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest

 

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