After price action in GBP/AUD broke below a significant support level on June 15th and confirmed the sell signal on the following trading day, we have now seen a pull back after the pair hit more than a two-month low on June 20th by 1.5372. The pair established a bear trend line and was trading in a downtrend from its 2012 peak by 1.6185 on May 23rd.
GBP/AUD has now broke and closed higher than the bear trend line acting as resistance yesterday, which gave scope for a pause in our bearish bias. However the bounce stalled around 1.5535 levels, at the extended support polarity from the beginning of April which is now acting as resistance. This level also coincides around the 38.2% Fibonacci retracement of the February low to May high move by 1.5551. The pair hit a daily high by 1.5600 today, but gains stalled at the 150-day moving average at 1.5595, and retreated lower to below the Fibonacci level and the extended support polarity.
We will favour resumption in the bearish trend if the pair fails to close above 1.5550, with an initial downside target around 1.5260, April 12th low, ahead of 1.5170. A close above 1.5550 and with a confirming break of the 15-DMA would give scope for further gains towards the 50 DMA first by 1.5755, then towards 2012 highs.