GBP/AUD recently busted through a falling trend line in an attempt to reverse from the downtrend.
Can this breakout gain more traction after this pullback?
Check out these inflection points on the 4-hour time frame!
GBP/AUD: 4-hour
GBP/AUD 4-hour Forex Chart Faster with TradingView
A combination of risk-off flows and downbeat reports from Australia appears to have dragged AUD lower earlier this month.
Downbeat Australian CPI already weighed on RBA tightening expectations. To top it off, the MI inflation index eased from 0.5% to 0.3% month-on-month in September while ANZ job advertisements slowed from 2.6% to 2.2% to reflect cooling price pressures and weaker hiring prospects ahead.
On the flip side, mid-tier data points from the U.K. have shown green shoots, with the final Q2 GDP and services PMI enjoying upgrades recently.
GBP/AUD is finding some support at the 38.2% Fib, which lines up with the broken trend line around the 1.8950 minor psychological mark.Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the Australian dollar and the British pound, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
A larger correction could still reach the 50% level at 1.8926 or the 61.8% retracement near S1 (1.8870) and the dynamic support at the moving averages. The 100 SMA is attempting a bullish crossover from the 200 SMA to confirm that bullish momentum is picking up.
Price has climbed slightly above the Pivot Point (1.8990) to suggest that buyers are already taking the upper hand, potentially setting their sights back on the swing high or to fresh upside targets at R1 (1.9150) then R2 (1.9280).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
GBP/AUD is pulling back to test the falling trend line it just broke, and it can be tricky to tell whether a retest like this is a buying opportunity or the start of a failed breakout. Premium members can read our lesson:
📖 The Break-and-Retest: A Higher-Probability Breakout Entry
Reading this helps you understand why waiting for a retest filters out many breakout traps, what price action to look for when a broken level is tested from the other side, and how to plan entries and stops around a pullback like this one.
And if you’re not a Premium subscriber yet, consider joining today.
With Babypips Premium, you get full access to School of Pipsology lessons that help you understand not just where a breakout happened, but whether the retest that follows is likely to hold.
