Over the weekend I mentioned an area on the GBPAUD that could trigger a reaction from sellers. The 1.7540/80 region is the intersection of former neckline support and an area that’s been a factor since the May 2017 high.
While I certainly wouldn’t call Tuesday’s candle a bearish pin bar, the long upper wick does suggest an influx of selling pressure in the region. And yesterday’s 1.7551 close puts the pound cross right between the 1.7540/80 area I wrote about on Sunday.
However, you will notice that the neckline here gets a little “messy”. Monday’s close appears to have almost broken above the level. But again, the long upper wick and final print on Tuesday keeps the bearish outlook alive, at least for now.
As long as the pair trades below 1.7570/80 on a daily closing basis (New York 5 pm EST), I will remain cautiously bearish. The next key support comes in near the June low at 1.7370/90. We could also see a few bids develop on a retest of last week’s low at 1.7282.
If sellers can keep this head and shoulders pattern together, the 1,250 pip objective comes in near the 1.6300 handle. Of course, several levels will become a factor in the interim including 1.7390, 1.7110 and 1.6700.
Alternatively, as mentioned previously, a daily close above that 1.7570/80 area would negate the idea altogether. With that in mind, the remaining 72 hours of trade this week promise to be pivotal for the GBPAUD.