The AUD to GBP exchange rate seems poised to go higher from its current levels at 0.4905. This assumption is based on the technical setup of GBPAUD which is the forex symbol most spot forex brokers provide.
On the 1-hour time frame, it can be seen that GBPAUD has recently made higher lows after a series of lower lows. Consequently, an inverse head and shoulders pattern has formed. This is widely considered as a bullish reversal pattern in forex trading. If there are enough buyers in the market, we may see GBPAUD rally to its March 19 highs at 2.0830.
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This setup follows after the Aussie failed to rally after China reported better-than-expected PMI reports. Earlier this week, China’s manufacturing and services PMIs printed above the 50.0 baseline level which indicates industry expansion.
On the other hand, it’s worth pointing out that GBPAUD still has room to trade lower and still maintain its recent uptrend. By connecting the lows of March 25 and March 31, it can be seen that there is trend line support around 2.0110. This price also coincides with the 61.8% Fib level (when you draw the Fibonacci retracement tool from the low of March 31 to the high of April 1). Reversal candlesticks around this level could mean that the upside potential on GBPAUD is still there. However, a strong close below the trend line could indicate that the currency pair may drop to its March 23 lows at 1.9510.
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