GBP/AUD 1H chart 7/6/2012 6:55AM EDT
The GBP/AUD is attacking a recently developed channel. Price action has been bearish in July, but really goes back to the double top in May from the 1.6175-80 area (seen in the daily chart). Momentum has been persistently bearish in July as the RSI remained under 60 after tagging 30. As we gear up for the last session of the week (US 7/6), the bearish outlook is being challenged.
At 1.5160, the market is near the declining channel resistance. It is also testing the 55-hour simple moving average, which has been respected since the end of June. Furthermore, the RSI is at 60. A market with bearish momentum tends to hold the RSI below 60, so a break above would reflect flattening against the bearish trend.
The daily chart shows the market’s sharp decline since topping from the 1.6175-80 area. It is also trading in a declining channel. Therefore, note that a break of the 1HR channel opens up the daily channel resistance, but is still within the context of a bearish market. Unless we break out of the channel, the downside remains toward the next pivot at 1.4960. Below that we expose the 2012 low of 1.4547.
GBP/AUD Daily chart 7/6/2012 6:55AM EDT
Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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