DanV
Short

GBPNZD - POTENTIAL SHORTING OPPORTUNITY FOR RETRACEMENT

FX_IDC:GBPNZD   British Pound / New Zealand Dollar
In my previous GBPNZD             chart I suggested a potential larger contracting triangle and associated long trade highlighted has developed really well the low. However the price action has now overshot the requirement for contracting triangle upper limits (see chart link below)

Therefore, the contracting triangle is no longer valid, nevertheless in the longer term the outlook for this pairs remains is very bullish , as noted in the comments accompanying the chart. If fact many have been noticing larger inverse Head & Shoulder pattern forming which could eventually lead to much higher prices.

Taking a fresh view of the entire price action to date since the April             2013 low another picture appears. Not entirely sure how to label this but suffice to say that it is an incredibly clear megaphone pattern which can be:
1. Bearish if it is found at the top of the major move.
2. Bullish at the beginning of the move as is the case, in this instance.

However upon completion of this pattern a correction would be in order.

Few points to note are:

1. The price has poked above September 2014 high possibly triggering many stops and could now be vulnerable for a retrace.
2. Most of the recent rise of the low has been fuelled by GBPUSD             strength and NZDUSD             weakness
3. GBPUSD             might also be at critical level with poking above its previous resistance level and several Fib confluence along with accompanying RSI divergence suggesting a retracement might develop sooner rather than later (see chart below).
4.Part of the rise of GBPUSD             was accompanied with UK election outcome which now is known and could suggest that now it might take a step back.

Technical Summary:

1. As noted above not sure if this "megaphone" should be an expanding ending diagonal or leading diagonal , but it is clearly seems complete now, which, I have labelled ABCDE but it could have been 1,2,3,4,5. The conclusion is the same in that short term top might develop here and could retrace, may be back to 2.0 or deeper.
2. Price has poked above April             2014 high and may have triggered many stops
3. Level reached also has several Fib projection and extensions with confluence in that zone.
4. Minor RSI divergence on hourly (see chart below)
5. GBPUSD             might also be making intermediate top (see chart below)
6. NZDUSD             related new out tomorrow might enable a retrace of NZDUSD             from oversold level.

However, this is a counter trend trade, hence of higher risk category and should be kept in mind in considering this trade.

Warning: This is my interpretation of price action using TA approach that I consider helps me most, but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.

For those who appreciates my analysis, select to follow me and the chart for notification of future updates. Indicate you like my analysis by thumbs up, comments and sharing it with others. If you have an alternative idea then please be constructive and share for all to learn from.

Thank you for taking the time to read my analysis.

DanV
danv-charting.com
http://www.danv-charting.com
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Hi Friends, After tonight event, sadly this short is now abandon as the larger trend noted when publishing this charts prevailed.

So whilst retiring this chart for now, I suspect all the stops have been taken out so some sort of retrace will take place. Will wait for clarity to get long as that will be the main trend for quite some time.

Thanks for your support.
+2 Reply
This pair is heading towards 2.4 longer term in my opinion
Reply
DanV MOD anwar.mashni
Yes agreed in fact longer term even higher levels are possible like 2.7 or so. Thanks for your comment
Reply
thank you Dan! looking forward to seeing your next trade on this pair, I've been monitoring it very closely. Cheers!
Reply
DanV MOD anwar.mashni
Me too. You are welcome.
Reply
It has been somewhat frustrating as the top we were looking for didn't form cleanly and continued to chop higher. Such action at significant tops do often occur and repeated attempts that fail to go your way could put many off before the reversal turn actually takes place.

However here is the updated charts with minor label adjustments still telling the same story and I would consider shorting on confirmation or on retracement of the recent decline on shorter time frame. Here is the chart:
snapshot
Reply
UPDATE: This pair went little beyond initially anticipated but still with in the limits and it seem that the anticipated top could be in place. Safe to enter short on meaningful retracement with recent high as the ultimate stop. Here is the updated daily chart
snapshot
+1 Reply
EURNZD was simply a safer bet until release of UK data and Carney speaking today...I'm sure the eurozone shorts will start working after NY opens today.
Reply
DanV MOD IvanLabrie
Yes indeed. But now both UK & NZD related data are out it could commence setting new course.
Reply
With today's spike, will you consider the interpretation still valid? Thanks, Hamed
Reply
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