GBPAUD is looking for a close near a fresh two-year low of 1.7424 and below the 1.7540 base, which triggered September’s upward correction and stretched July’s appreciation to a four-month high of 2.0845, after Thursday’s steep decline.
The Stochastics and the RSI, however, have yet to ovecome oversold conditions as the former is heading towards 20 and the latter continues to point downwards below 30. Still, the recent squeeze in the Bollinger bands and the recent closure below them, hint that the bulls could be around the corner.
If the 1.7540 floor collapses, the next turning point could commence somewhere between 1.7285 and 1.7140, a key support region during 2016 – 2018.
Alternatively, a rebound may initially pause around the 1.7850 support-turned-resistance area before testing the 20-day simple moving average (SMA) around the 1.8045 barrier. Slightly higher, the 1.8223 restrictive region may come next to the rescue, deterring any move towards the 1.8430 hurdle and the 200-day SMA.
In the bigger picture, the pair is still testing the neutral phase at the bottom of a downtrend. A decisive close below the 1.7540 level or a rally above 1.8530 would change the outlook accordingly.
Summarizing, GBPAUD is holding a bearish bias near the crucial support zone of 1.7540, where any clear violation could incentivize additional selling.