Will the euro and pound resume their climb soon? Both GBP/AUD and EUR/USD are making their way towards nearby support areas and might be due for a bounce.
This pair bounced off its ascending channel resistance on the 1-hour chart, setting its sights back on support around the 1.7400 major psychological level.
Applying the Fib tool on the latest swing low and high on the 1-hour time frame shows that the 50% level lines up with this resistance turned support area while the 38.2% Fib lines up with the 200 SMA. If any of these Fib levels hold as a floor, GBP/AUD could bounce back up to the swing high or until the channel resistance.
The 100 SMA is safely above the longer-term 200 SMA on the chart so the path of least resistance is to the upside. Also, stochastic is pulling up from the oversold area to suggest that buyers are trying to regain control of price action. A break below the 61.8% Fib, on the other hand, could be an early sign that bears are gaining more momentum.
EUR/USD is also moving inside an ascending channel and is currently testing the mid-channel area of interest.
This support area lines up with the 100 SMA dynamic inflection point and the 38.2% Fib, which suggests that it could hold up pretty well as a floor. At the same time, stochastic is already climbing out of the oversold area to show that buyers are taking the upper hand and might be strong enough to push for a move back to the channel resistance.
The 100 SMA is safely above the longer-term 200 SMA, which also confirms the presence of bulls. However, if a larger correction is needed, EUR/USD could still retreat to the 50% Fib near the 200 SMA or the 61.8% Fib right on the channel support.