After two weeks of the GBP's rally against all major currencies, we find ourselves in a new week and a new month to predict the movement for the pair in May, which has always been known as a falling-down month.
The GBP/AUD currency pair has risen in the last six weeks to reach its highest levels in seven months at 1.7362. The rally came after breaking the downside trend line which started on September 15. The pair is trading inside a price channel and reached the upper limit. It was expected to back down in the next few days like it happened after April 19 when the prices touched the upper limit and made a correction wave and rose again.
The RSI indicator made an overbought sign and started to slope down. We have a support area 120 pips down at the Moving average indicator.
The Next Few Days
Based on this analysis we can sell the pair now at the current levels 1.7220 because the pair couldn't break the channel up and decline back again. In this case we would keep our first target at the SMA at 1.7100 and the second one at 1.6860, especially since we have the cash rate tomorrow from Australia. The RBA is widely expected to hold interest rates this week and will likely express no intention of raising rates anytime soon.
We have to be careful about this week's calendar news like the cash rate we referred to above and the trade balance from Australia, in addition to the PMI numbers from the UK.
