GBPAUD Complex Head and Shoulders (June 15, 2016)

Price has since pulled up to this broken support area and looks ready to resume its drop. In addition, a complex head and shoulders pattern has formed and a break below the neckline at 1.8250 could confirm that a longer-term downtrend is due.

The chart pattern is approximately 4,000 pips tall so the resulting breakdown could be of the same size. However, the 100 SMA is still above the 200 SMA on this time frame, hinting that the path of least resistance is still to the upside.

Stochastic is pointing down to show that sellers are taking control of price action. RSI is also heading south to show a buildup in bearish pressure. If sellers continue to stay in control, a move towards the 1.5000 area could be seen.

There are plenty of UK reports on this week's schedule and these could serve as strong catalysts for a move. So far, the UK CPI readings have missed expectations, with the headline figure unchanged at 0.3% instead of improving to the estimated 0.4% figure and the core reading also unchanged at 1.2%. 

UK jobs data is due today and a 0.1K drop in claimants is eyed. The unemployment rate is expected to hold steady at 5.1% while the average earnings index could sink from 2.0% to 1.7% to show weaker wages. UK retail sales and the BOE statement are lined up tomorrow.

Also, Brexit updates have been bearish for the pound these days as the polls are showing a lead in favor of those voting to leave. Still, remarks from BOE Governor Carney and UK Chancellor Osborne's warning about raising taxes in the event of a Brexit could swing the lead and keep the pound afloat. 

As for the Aussie, the Westpac consumer sentiment figure released earlier today showed a 1.0% decline, indicating a downturn in confidence. Australia's jobs report is due tomorrow and an increase of 14.8K in hiring is eyed.

By Kate Curtis from Trader's Way