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The British pound struggled a lot recently against currencies such as the Euro, the US dollar and the Aussie dollar. There is a strong bearish trend line formed for the GBPAUD pair. However, it looks like the downside is exhausted and the pair might correct higher in the near term. The recent economic releases in the UK were not encouraging enough to lift the British pound. Today, the UK industrial production and the manufacturing production data will be released, which might cause a lot of moves in the British pound pairs including the GBPAUD pair. If the outcome stays in line with the expectation or beats the forecast, then the British pound might correct higher in the near term.
There is a monster bearish trend line formed on the hourly chart of the GBPAUD pair, which acted as a resistance on a number of occasions. The pair recently traded twice towards the 1.8525 area, but failed to break it. So, there is a chance of a double bottom pattern forming, which if turns out true might take the pair higher in the near term. If the British pound buyers manage to clear the highlighted trend line, then it might take the GBPAUD pair towards the 50% fib retracement level of the last drop from the 1.87798 high to 1.8526 low. One positive to note from the charts is that the hourly RSI is back above the 50 level.
On the downside, initial support is around the recent low of 1.8526. A break below the same might invalidate the bullish view and ignite more losses.
Overall, one might consider buying with a break above the stated trend line as long as the pair is trading above the last low.
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Posted By IKOFX Technical Team: Online Forex Broker
Website – http://ikofx.com/
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