The GBPAUD broke a significant support level on Wednesday. The 1.7590 handle has served as a pivot since November of last year. You can see from the chart below how this area has supported prices over the previous three sessions.
However, yesterday’s 1.7532 close means that any retest of the 1.7590 area will likely encounter an influx of selling pressure.
A short bias is also congruent with the recent trend. Although the GBPAUD was in an uptrend between September 2017 and April of this year, things have changed now that the cross is carving lower lows.
My longer term target (two to four months) is the 1.6700 area. Not only is this a key horizontal area, but it’s also trend line support that extends from the 2016 low.
That said, you can rest assured there will be bounces along the way. Look no further than the 1,500 pip descent between May and August of last year. Some of those counter-trend moves totaled more than 400 pips.
Key support comes in at 1.7360 followed by 1.7100. Keep in mind that non-farm payroll is this Friday at 8:30 am EST. While it won’t impact a currency cross like the GBPAUD as much as a major pair, it’s still a good idea to prepare for some extra volatility around this time.