GBP/AUD 1H chart 7/9/2012 2:00PM EDT
The GBP/AUD has broken above July’s short-term declining “channel” resistance as it has anchored to a rising channel since finding support near 1.5060 on July 5. The market has since climbed to 1.5250 and stalled. A second attempt failed, forming a bearish divergence with the RSI in the 1H chart. You can also say that a double top seems to be forming under the 1.5250 handle and support at 1.52.
A break below 1.52 completes the double top and suggests some bearish attempt in the near-term. The break of the 1H channel opens up 1.5130 support pivot, before exposing the GBP/AUD to the July low at 1.5060.
The 4H chart backs up the bearish outlook more as the trend has been bearish since May, and the market has not pushed the 4H RSI above 60 since. Still there can be still some upside risk toward the 1.5360-1.5385 area. However, the bullish scenario is still within a bearish context until the break above the trendline from June, seen in the 4H chart.
It will be interesting to see whether the bearish momentum can be kept in the 4H chart. If the RSI does remain below 60 or comes right back below after a brief break, the momentum continues to be bearish.
If the RSI in the 4H chart also falls back below 40, we might be seeing the market head towards 1.5060 with heavy inclination to break it.
GBP/AUD 4H chart 7/9/2012 2:07AM 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.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.