AdrianRaymondFX
Short

GBP/NZD may fall back to 2.27 with negative divergence

FX:GBPNZD   British Pound / New Zealand Dollar
318 8 2
The GBP/NZD cross has staged an impressive 12-week rally, the second half of which has mostly been through selling pressure on the NZD following the RBNZ's recent rate cut decision. The daily chart is currently suggesting a downside risk as the RSI is starting to form a negative divergence. This divergence still has to be confirmed, and a daily close below 2.218 today would increase significantly the likelihood of such a confirmation. If this divergence is indeed validated, prices should fall back to around 2.27 by early next week. It's imperitive that the GBP/NZD breaks below 2.31 in the next 2-3 days for this divergence to really allow traders to remain against the overall trend here. I wouldn't be keen on holding shorts if prices don't break below this level fast enough.
The target was hit early this morning. Things were a little complicated at the start of the week (Tuesday morning especially), but this was overall a decent trade setup.
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Do you see reversal on this pair ?
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That's the idea of the trade suggested at the beginning of the week. But to really have a breakdown over the medium term, 2.27 will need to break fairly quickly (by early next week).
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Here's that wedge.
snapshot
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Things are now shaping up pretty good. Prices broke a wedge support this morning.
snapshot
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My bearish scenario is definitely invalidated now.
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AdrianRaymondFX AdrianRaymondFX
I might have been a little too quick on that last call. Prices are falling back to lows of the day.
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Prices have hit fresh highs this morning, but it's not necessarily clear if this invalidates the divergence. As I see it now, there's a much lower probability that this divergence will be validated.
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