Published: September 15th, 2021
GBPAUD showed a bearish momentum on the intraday chart as soon as the UK CPI moved higher from 2% to 3.2% year over year in August. The result beat the expectation of a 2.9% increase while the Core CPI moved higher to 3.1%.
According to Bank of England Governor Andrew Bailey, the monetary policy raised the question of an increased borrowing cost that will affect the economy with the current increase in CPI. However, based on the current CPI figure, GBP has more room for upside against the Australian Dollar. Investors should closely monitor how the Brexit and Covid issue affects the economy. On the other hand, the Australian economy is expected to show a negative momentum with the worst than previous employment report Thursday. As per the current projection, the unemployment rate may increase to 5% from 4.6% in the last month.
The situation is different in the chart where the price approached a critical supply zone. Therefore, investors should find a solid bullish momentum above the area to rely on the bullish possibility.
Let’s see the upcoming price direction from the GBPAUD technical analysis:
GBPAUD showed an impressive bullish pressure as soon as the price moved above the dynamic 20 EMA at the beginning of May. After that, the price tried to come below the dynamic level but failed and found a top at 1.9154 level.
Later on, the price started a broader correction and broke the bullish structure by making a new low below the 1.8760 event level. Moreover, the bearish movement from the yearly high of 1.9154 level followed a rally base rally supply formation at around 1.8885 to 1.8950 area. Therefore, as long as the price remains below the 1.8950 level, it may increase the bearish pressure in the coming days.
The above image shows the daily chart of GBPAUD where the price is trading above the dynamic support while the Aroon Down is above the Aroon Up in the indicator window. Moreover, the Aroon Down is currently above the 50% level after reaching the 100% area. Therefore, if the Aroon Down moves above the 60% level with a bearish daily close below the 1.8885 level, we may expect intense selling pressure towards the 1.8414 area. Otherwise, a break above the 1.8950 with a bullish daily close may influence bulls to test the 1.9154 level again before aiming lower.
As per the H4 market context, the overall sentiment is still towards bulls as the price is trading above the Ichimoku Kumo Cloud. Moreover, the Senkou Span A is above the Senkou Span B in the future cloud, where the Chikou Span moves above the cloud resistance. Furthermore, the price is trading above the 1.8835 intraday event-level while the dynamic Tenkan Sen provides support to the price.
Therefore, bears should wait for the price to come below the 1.8835 level with a bearish H4 close. Later on, if the Dynamic Tenkan Sen moves below the Kijun Sen, we expect the bearish pressure to extend towards the 1.8760 support level. On the other hand, a break above the 1.8950 is important for bulls, increasing buying pressure towards the 1.9020 area.
In the intraday chart, GBPAUD has both bullish and bearish possibilities. The current price is exceptionally bullish as it is trading above the 1.8835 event level, where the dynamic 20 EMA and weekly vwap are working as support. Moreover, the price became volatile after moving below the 1.8884 intraday high volume level, increasing the bullish possibility in the coming hour.
Based on the current market context, any bullish H1 close above the 1.8884 may extend the current bullish pressure towards the 1.8940 area. On the other hand, bears should wait for the price below the 1.8835 level to consider the current bullish momentum invalid. In that case, the price may come lower towards the 1.8760 level.
As of the above discussion, GBPAUD is bullish in the intraday chart while the price is near an important supply zone. Therefore, sellers at the supply zone may boost the bearish momentum if the price exceeds the 1.8835 event level with a bearish H4 close.
On the other hand, any bullish hourly candle above the intraday swing high 1.8902 may increase the buying pressure towards the 1.9150 level.