GBP/AUD traded lower on Monday, after it hit resistance at 1.8246. Although the very short-term path appears to be sideways since last Wednesday, the broader picture suggests a downtrend marked by the downside line drawn from the high of April 2nd. On top of that, the rate is trading below all three of our moving averages on the 4-hour chart, and thus, we would consider the near-term outlook to be negative for now.
A clear and decisive dip below 1.8060 would confirm a forthcoming lower low and may pave the way towards the 1.7875 area, which prevented the rate from drifting lower on September 9th and 12th. If that zone gets broken this time around, the bears could then target the 1.7790 level, marked by the low of September 3rd, or the 1.7705 barrier, which provided strong support between August 9th and 14th.
Taking a look at our short-term oscillators, we see that the RSI hit resistance twice near its 50 line and turned down, while the MACD, although above its trigger line, shows signs of topping within its negative territory. Both indicators suggest that the rate may have started gaining downside speed again, which corroborates our view for some further short-term declines.
In order to abandon the bearish case, we would like to see a strong rebound above 1.8320, which is the high of last Wednesday. Such a move would drive the rate above the aforementioned downside line and may encourage the bulls to target the 1.8460 level, marked by the high of last Tuesday. Another break, above 1.8460 could allow the bulls to climb towards the 1.8650 zone, defined as a resistance by the high of May 29th.
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