Technical Analysis – GBPAUD strikes fresh 3-year high
November 27, 2013 9:38 amVideo
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Sterling has been rising steadily against the Australian dollar in recent months due to the diverging central bank policies between the UK and Australia.
Strong UK data has raised expectations that the Bank of England could begin raising interest rates soon, which would be positive for the pound. Meanwhile the Australian dollar is under pressure due to the threat that the Reserve Bank of Australia could cut rates after recent comments from Governor Stevens who said the value of the currency is too high.
After reaching all-time lows in March of this year, GBPAUD has made a comeback and has since gained over 20% to today’s 3-year high of 1.7812.
A strong rally was initiated after a breakout occurred on November 21 when the pair rose above the downtrend line from August.(There were lower peaks, lower troughs from August to October).
The long-term trend is bullish as price action remains above the uptrend line since April of this year. Meanwhile, the pair is trading above the 100-day and 200-day moving averages, which is also a bullish indication.
Other technical indicators like the RSI (above 70) and stochastic (above 80) have entered bullish territory but overbought, showing a strong sign of continuation to the upside, targeting the last previous high on July 4, 2010 at 1.8136.
To the downside, major support is at the March 12, 2013 low of 1.4375, below which the bullish scenario would be threatened.
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