British Pound vs New Zealand Technical Forecast
GBP/NZD – Stalled Bearish Sentiment
Last week, GBP/NZD hit a near two-week high of 1.9270. Ultimately, the price retreated and closed a weekly candlestick modestly in the red with a 0.1% loss.
Alongside that, the Relative Strength Index (RSI) remained flat below 50 highlighting a paused bearish momentum.
GBP/NZD Daily PRice CHART (July 20, 2018 – JuLy 23, 2020) Zoomed Out
GBP/NZD Daily PRice CHART (MaY 20 – JuLy 23, 2020) Zoomed In
On Tuesday, GBP/NZD declined to the current 1.8964 – 1.9217 trading zone reflecting a indicating that bears were still charge. As a result, the price tumbled yesterday to an over ten-month low of 1.9004.
However, it’s important to note the price/RSI divergence as the first created a low with a lower low, while the latter created a low with a higher low signalling a possible reversal of the downward trend.
A daily close below the low end of the current trading zone may guide GBPNZD’s fall towards the Sep 2017-high at 1.8742.
On the flip-side, a failure in closing below the low end of the zone may start a rally towards the high end of it, and a further close above that could embolden bulls to lead the way towards the June 18 high at 1.9517.
GBP/NZD Four Hour PRice CHART (May 24 – JuLy 23, 2020)
Yesterday, GBP/NZD traded below the bullish trendline support originating from the July 7 low at 1.9021, indicating that bearish momentum was still in place.
With that said, the price developed a Double Bottom pattern reflecting a possible reversal on the horizon. A break above the neckline of this pattern located at 1.9140 could reverse the pair’s direction higher.
To conclude, this week the pair resumed bearish price action, although the price/RSI divergence discussed above on the daily chart provides a good base of a possible reversal. Therefore, a break above aforementioned neckline resistance could trigger a rally towards the high end of the current trading zone discussed above at 1.9217. A break below 1.8943 may send GBPNZD towards 1.8850. As such, the weekly support and resistance levels underlined on the four-hour chart should be considered.
Written By: Mahmoud Alkudsi,Market analyst
Please feel free to contact me on Twitter: @Malkudsi
