GBPAUD Channel Support (July 10, 2017)

GBPAUD has been trading inside an ascending channel pattern visible on its 4-hour time frame and is currently testing support. A bounce could take it back up to the resistance at 1.7150 to 1.7200 while a breakdown could mark the start of a reversal.

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the 200 SMA lines up with the bottom of the channel, adding to its strength as support. At the same time, stochastic is heading up from the oversold area to signal a return in bullish pressure.

Economic data from the UK turned out mostly weaker than expected last week, from its PMI readings to manufacturing production data, to signal that the economy might be on shaky footing leading up to Brexit. UK jobs data is up for release today and a higher number of claimants at 10.4K versus the earlier 7.3K is expected, but traders are likely to pay closer attention to the average earnings index to see any signs of wage growth.

Meanwhile, the Aussie was also weighed down by a less upbeat RBA decision. Only medium-tier reports are due from the Australian economy this week so weak readings could underscore the central bank’s not so hawkish view. NAB business confidence, Australian home loans, and Westpac consumer sentiment data are lined up.

By Kate Curtis from Trader’s Way