FxWirePro: Don't get puzzled with GBP/AUD's abrupt gains, likely to test channel support but long term downtrend seems intact

After the ruthless slumps form the peaks of 2.2372, the pair has broken a support at 2.0152, it is on the verge of next medium term support at 1.9747 and at 1.9313 levels which 38.2% retracements during Q2 as sterling worsening and losing its strength against Aussie dollar.

In this southward direction journey we've been seeing bearish candles quite often patterns like gravestone stone, hanging man and shooting star at peaks of 2.1553, 2.1607, 2.0101 and 2.0033 levels respectively (see within red colored circled areas at peaks).

These bearish pattern are an extremely helpful for traders visually to see where resistance and supply is likely located and you can see their effects on daily price dips.

We had stated in earlier post as well, "after an uptrend, the gravestone doji can signal to traders that the uptrend has reversed and no fresh long positions should be initiated.

In conjunction with these bearish patterns, for more substantiation both leading and lagging indicators are clear sell.

Robust volume build up is an additional conformity to this bear trend.

On dailies, 21DMA has just crossed over 7DMA, while MACD on both daily and monthly signal bear trend continuation.

We could foresee it is likely to slump further towards sloping channel as RSI and stochastic are indicating selling momentum.

The pair has pretty much responded as per earlier analysis as well and hence, we could continue to foresee a little bit price bounces in near term as the daily chart suggest some buying interest that would upshot targets at 1.9775, if it fails to hold this level 1.9745 is also quite possible in short run with some price recoveries but we maintain our long term southward targets at 1.9747 and 1.9313.