In addition, the momentum indicators are showing rally exhaustion signs. The Average Directional Movement Index (ADX) is hovering around its 25-threshold and hence remains in waiting mode, and the RSI stands above its 50-midpoint but it has probably peaked. In the meantime, the stochastic oscillator has broken below its moving average, opening the door to a bearish signal. More interestingly, a bearish divergence has formed as the higher highs in GBPAUD have been met by lower highs in the stochastic.

Should the GBPAUD bears try to recapture the market reins, they would turn their attention to September 26, 2022 upward sloping trendline and the 1.8724-1.8820 range, defined by the October 11, 2018 high and the 50-day simple moving average (SMA). Even lower, the 1.8517-1.8553 area, populated by the 78.6% Fibonacci retracement of the January 28, 2022 – September 26, 2022 downtrend and 100-day SMA, could prove tougher to crack than currently envisaged by the bulls.

On the flip side, the bulls must be feeling very confident and hence preparing to break the 1.9183-1.9220 area. If successful, they will have the chance to register a new 2023 high and the highest print since May 7, 2020. They could then set their eyes on the December 16, 2019 high at 1.9521.