Yesterday, GBP/NZD declined down to a trend-line dating back to July and just below last week’s low before posting a key-reversal bar. The rejection wasn’t ‘uber-powerful’, but forceful enough to validate support and keep GBP/NZD in play for a continuation higher out of the downward sloping channel ('bull-flag-like' pattern). A breakout above the top-side of the channel should be enough to spark additional buying interest and keep the sequence of higher-highs and higher-lows in place since January.
A breakdown and close below yesterday’s low at 19172 will take this set-up off the table. Looking higher, the first level of resistance arrives at the March high of 19643, followed by the December high at 19838. If the trade is working towards these levels, a portion of it can be sold at the first target, and the remainder held for the second target or possibly better. Placing limits ahead of these levels by 30-50 pips is prudent to avoid getting caught by sellers showing up ahead of these levels.
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GBP/NZD Daily Chart
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---Written by Paul Robinson, Market Analyst
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