Good day traders. Today’s focus is on GBPAUD and its mid-term price development. Let’s dig in.
GBP/AUD can be trading in a complex, corrective rise since 2016 when a higher degree wave A unfolded its five sub-waves and found its low. As such we now view this corrective rally that followed as a higher degree wave correction labeled as wave B, that can see limited upside and a new reversal lower around the 1.8600-1.8700 region. We also labeled this correction as a W-X-Y pattern, with its final phase of wave Y being in progress. Ideally sub-wave Y) of Y is now trading in final stages, so let’s watch out for a possible reversal in upcoming weeks and months. Also, if we get a sharp reversal in five-waves, then this would be the first suggestion that the big correction since 2016 is completed and that more weakness may now be in play for the pair.
The Fibonacci ratio of 50.0, the upper corrective channel line and the former swing low of wave 1 can all offer resistance and push the price in the opposite direction.