GBP/USD consolidates following selloff
GBP/USD saw a massive decline yesterday, initially instigated by a weak construction PMI. The hammer candle marked a bottom to the selloff, setting a new support level of $1.4894. Currently this price action looks like a short-term breather before another leg lower.
Quite simply, given such a strong selloff, it would have made sense to see a strong recovery. The absence of such a sharp move higher makes it seem as if bulls are few and far between for now and thus the bearish view remains.
A closed hourly candle above $1.4957 would signal the potential for further upside retracement, where the next key resistance level would be just below $1.500. However, until that happens, further losses seem likely, with $1.4894 and $1.4831 the next key levels. Be aware that the UK services PMI reading this morning could provide significant volatility.
EUR/GBP spike brings chance of further gains
The spike seen yesterday in EUR/GBP managed to break price through the key £0.7080 resistance level. This morning has seen some of that retraced, but the fact we saw that new high created means a more bullish outlook now prevails.
With price attempting to break back below £0.7080 this morning, we are now seeing a strong move higher within the current candle, meaning a possible bullish hammer. This would point to the pair turning back into the green soon, with £0.7100, £0.7110 and £0.7131 the next key resistance levels. Support levels of note are £0.7080 and £0.7053. Be aware of the UK services PMI and ECB meetings which will both move this pair heavily.
AUD/USD breaking out of channel
AUD/USD has been a standout performer this week, particularly on Monday and Tuesday. However, we have since seen a descending channel in play, retracing some of that initial move higher.
Price is currently breaking through the top trend line in this channel, which points towards a possible continuation of this uptrend. The key here is a closed hourly candle above $0.7336, which would point towards a bullish bias, with resistance levels of $0.7343 and $0.7351 in view.
However, until we do break $0.7336, there is a good chance of continuing this trend of lower highs and lows. Any move lower would look towards $0.7320, $0.7297 and $0.7284.