U.K. politics and Brexit headlines could keep hogging the spotlight this week, so let’s see if these pound pairs can stay above the nearby areas of interest.
Even though the mid-channel area of interest on Cable was able to stop the pair’s bleeding after the U.K. elections, it looks like pound bears are having another go at trying to break support.
The 100 SMA just crossed below the longer-term 200 SMA on this time frame, confirming that selling pressure is starting to pick up. Stochastic is already closing in on the oversold area but still has a bit of room to head further south.
A break below the 1.2650 minor psychological level could be enough to clear the path for a drop all the way down to support at 1.2250-1.2300 or maybe even a break lower. A bounce off the current levels, on the other hand, could take the pair back up to resistance at 1.3000-1.3050.
This one’s also halfway through on its selloff back to the range support, but the area of interest around the 1.6800 handle could draw some buyers in.For one, the 100 SMA is attempting to cross above the longer-term 200 SMA to signal a return in bullish energy, which might bring price to the range resistance at 1.7500-1.7550. These moving averages could also serve as dynamic support areas around the 1.6700 major psychological mark.
Note that GBP/AUD is currently treading at a former support zone and the broken neckline of a double bottom pattern, which is considered a classic uptrend signal.
At the same time, stochastic is already indicating overbought conditions and is trying to move back up so the pair might follow suit. If you’re confident that pound bulls could charge again, it might be better to wait for a few reversal candlesticks around these potential support zones before going long.
In any case, just make sure to practice proper risk management, a’ight?