By: Mike Kulej
In recent days, the GBP-AUD slowed its decent to some degree. This pair has made an all time low at 1.5960, fueled by the seemingly unstoppable strength in the Australian dollar and lack of good news for the Pound. However, that trend could be changing.
On the intermediate term chart, the price has settled into a trading range. It failed to make a new low at 1.5960, followed by stalling at the recent high 1.6245, creating a congestion zone almost 300 pips wide.
What is significant about this particular range is the fact that it formed soon after the one from late September. This not a sign of a healthy trend and indicates that the bearish run could be in trouble.
The two lows within this trading range form, in effect, a double bottom, which is supported by the Three Line Break chart. If the price moves out of the trading range upward, it could be a first sign of a longer-term reversal, considering that the resistance is above the 100 SMA.
That would have to happen on closing bases, because this pair is notorious for “spiky” moves, meaning many false breakouts. Until this happens, or a move in the opposite direction, the GBP-AUD is in a sideways mode, with a bullish bias.