GBP/CAD And AUD/NZD Outlook
Phillip Konchar | Oct 23, 2018 02:58PM ET
The GBP/CAD pair broke down yesterday to test its 50 DMA at 1.6974 and fell a little further today to 1.6964 before trying to retest resistance at 1.7000. The pair is consolidating around 1.7000 once again and support associated with this price action is containing price above 1.6950. The rising support trend line is also in play in the area. A loss of this level may result in a drop to 1.6900 but a continued move lower could force traders to close out positions and result in a rapid drop through 1.6800 and 1.6700 to the 1.6600 area. It is in this area where support has firmed up over the last two months with a low at 1.6565.
Resistance at the 100 DMA may only provide very short term action at 1.7030 but a break higher might suggest a push back towards 1.7100 is brewing. Beyond this level 1.7200 has been somewhat of a ceiling, bar the notable exception two weeks ago. The high reached on that occasion was 1.7286 and this will be key to breaking the consolidation. The 200 DMA is positioned at 1.7365 and turning lower. Above this area the 1.7500 level can attract a lot of interest with a break higher opening the way for an attempt to retest 1.7775.
The AUD/NZD pair has found trend line support at 1.0746 after breaking down under the previous trend line support around 1.0880 two weeks ago. Price has rebounded from this 1.0750 area and is retesting 1.0800. A failure to regain this area can result in a drive lower to 1.0700 followed by the June low at 1.0657 and the 1.0650 area. This price action would present a bearish picture and potentially open the way for a test on 1.0600. This level acted as resistance in the past but a potentially stronger area of support exists around 1.5000.
Resistance is stacking up above 1.8000, with the 200 DMA at 1.0831 and the 1.0822 level acting on price. Above this pocket the broken trend line comes into focus around 1.0880 with the 1.0900 level overhead. The 50 DMA is declining through 1.0910 followed by the 100 DMA which is rolling over at 1.0930. These levels, if overcome can unlock a rested of 1.1000 where a zone of resistance and support formed since May. A breakout higher could stretch the price to 1.1100 and offer the chance of a retest on the August high at 1.1178.
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