The GBP/AUD pair rose during the course of the day on Monday, but found the 200 day exponential moving average to be far too resistive. You can see that we stopped right at that level and turned back around. More importantly, we have a previous uptrend line that crossed right there as well, and of course the bottom of the descending triangle that we have recently broke down below. The question now is whether or not we can continue to go lower?
Ultimately, you have to keep in mind that we have had a significant sell off recently, and that the 200 day exponential moving average tends to be a widely followed indicator by longer-term traders. There is an interest-rate differential play to be had in shorting this market as well, so there is also the possibility that people were just simply looking for some type of interest-rate play.
Couple of Sessions
I believe that the longer-term move will be based upon the next couple of sessions, as this is such an important resistance barrier. If we do fall from here, we should see the market reach down below the 2.05 level on the next couple of days, and then head towards the 2.0 level. That could lead to a longer-term “sell and hold” type of situation, which is what I’m hoping to see.
On the other hand, if we break above the uptrend line, you have to start thinking that perhaps the market could find some footing. I would not be completely convinced until we broke above the 2.10 level though, as the markets in general have been fairly messy. It’s not as if the markets have been following a straight line in one direction or the other, and quite frankly this pair hasn't acted any differently. However, most of the signs point to lower pricing, so of course that’s the play I am trying to take advantage of.
