Bullish GBPNZD After Snap Sell-Off
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GBPNZD Rally to Return after Brief Sell-Off
The recent GBPNZD rally fizzled out over the last 48-hours, dropping the best part of two cents and returning back to levels seen in mid-March. Kiwi traders are also looking carefully at the ongoing US-China trade spat with the NZ economy reliant on Chinese demand. Although the New Zealand Ministry of Trade and Export said that China’s retaliatory tariffs on US products is ‘measured’ and won’t impact the economy, the worry going forward is that New Zealand could be caught in the crossfire if global trade wars ratchet higher.
On the four hour chart, GBPNZD looks oversold with the stochastic indicator currently trading around a one-month low of 7, while the 200-day moving average – currently around 1.9220 - should provide healthy support. Just above this there is a gap on the March 16 candle between 1.9240 and 1.9250 which may provide another layer of support. However if these levels are broken and closed below, the pair may fall back to 1.9180 or a touch lower.
On the upside the 20- and 50-day moving averages of 1.9420 and 1.9470 should be the first targets with little then left in the way ahead of 1.9530 before the March 21 ‘double tops’ around 1.9640.
Chart: GBPNZD Price Chart Four Hour Timeframe (February 20 – April 3, 2018)
Entry Point: 1.9345 (at time of writing)
Target: 1.9640 (March 21 ‘double tops’)
Stop-Loss: 1.9215 (Just below 200-day ma)
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--- Written by Nick Cawley, Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.