On October 22nd, the GBP/NZD reached and rejected the 1.9800 psychological resistance level along with the 38.2% Fibonacci retracement. At this point, RSI has formed a bearish divergence, which eventually resulting in a fast price drop. Pair has declined by 400 pips in just 4 trading days, breaking below the uptrend trendline and 50 Exponential Moving Average.
Perhaps this was the first bearish signal, after which bears could have wanted for a pullback. And in fact, correction up took place, where GBP/NZD reached 1.9620 high. It can be seen that 50 EMA, along with the uptrend trendline this time, acted as the resistance, which has been rejected, yet again suggesting an increased selling pressure.
Therefore, the probability of further price decline remains high, which might result in a downtrend towards one of the support levels. The first support is confirmed by 78.6% and 161.8% Fibs applied to the current corrective move up. The second support is confirmed by 88.6% and 227.2% Fibs and is located near the 1.9175 area. One of these levels might become a strong demand zone if/when reached and therefore, must be watched for either a breakout or rejection.
Regarding the upside potential, a break above 1.9620 could be the first bullish signal, although it will not invalidate the bearish forecast, but can extend the consolidation. And only break above the 1.9800 level will completely invalidate the bearish outlook and GBP/NZD could be changing the trend from bearish to bullish.
Key support levels: 1.9400, 1.9288, 1.9117
Key resistance levels: 1.9580, 1.9620, 1.9800
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Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
Perhaps this was the first bearish signal, after which bears could have wanted for a pullback. And in fact, correction up took place, where GBP/NZD reached 1.9620 high. It can be seen that 50 EMA, along with the uptrend trendline this time, acted as the resistance, which has been rejected, yet again suggesting an increased selling pressure.
Therefore, the probability of further price decline remains high, which might result in a downtrend towards one of the support levels. The first support is confirmed by 78.6% and 161.8% Fibs applied to the current corrective move up. The second support is confirmed by 88.6% and 227.2% Fibs and is located near the 1.9175 area. One of these levels might become a strong demand zone if/when reached and therefore, must be watched for either a breakout or rejection.
Regarding the upside potential, a break above 1.9620 could be the first bullish signal, although it will not invalidate the bearish forecast, but can extend the consolidation. And only break above the 1.9800 level will completely invalidate the bearish outlook and GBP/NZD could be changing the trend from bearish to bullish.
Key support levels: 1.9400, 1.9288, 1.9117
Key resistance levels: 1.9580, 1.9620, 1.9800
Thanks for your support! If you liked this analysis, please support our profile with a 👍 and follow us to get a new daily analysis.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.