GBPAUD Double Bottom Breakout (May 02, 2017)

This would mean strong bullish signals for the pair, as the chart patterns are approximately a thousand pips in height.

The 100 SMA is still below the longer-term 200 SMA on the daily time frame so the path of least resistance is to the downside. However, the gap between the two is narrowing to indicate a potential upside crossover and draw more bulls in the game.

Still, it's worth noting that stochastic is indicating overbought conditions at the moment and could turn lower to reflect a pickup in selling pressure. In that case, GBPAUD could still make it back down to the bottoms at 1.6000 if selling pressure kicks in.

The RBA is scheduled to announce its monetary policy statement today and no changes to interest rates are eyed. In their earlier statement, the RBA sounded less upbeat about the economy as they acknowledged the slowdown in hiring.

Aside from that, PMI reports from China turned out weaker than expected. Over the weekend, both the official manufacturing and non-manufacturing PMI printed steeper than expected declines to reflect a slowdown in industry growth. Earlier today, the Caixin version of the manufacturing PMI indicated a fall from 51.2 to 50.3 versus the projected rise to 51.4.As for the pound, UK PMI readings are also due this week and more signs of resilience in the economy even with Brexit concerns could keep traders bullish on the currency.

By Kate Curtis from Trader's Way