Trend traders gather ’round!
GBP/NZD may be in for a bearish swing as it struggles to make new September highs near a key resistance zone.
Will it lead to the pair extending its months-long downtrend?
GBP/NZD: 4-hour
GBP/NZD 4-hour Forex Chart by TradingView
The New Zealand dollar is recovering from when traders worried about China’s data releases and U.S. and global growth and NZD hit notable lows. The British pound, on the other hand, is still trading in wide ranges as traders price in mixed U.K. data releases and slight risk aversion in the European region.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the British pound and the New Zealand dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!GBP/NZD, which turned lower from 2.1900 at the end of July, has been trading in a downtrend. It recently found support from the 2.1000 psychological level but has also hit a ceiling near the 2.1200 levels.
Are we looking at a good place to jump in GBP/NZD’s downtrend?
Note that the pair’s current resistance area lines up with the R1 (2.1194) Pivot Point line and the 100 SMA in the 4-hour time frame. More importantly, it’s just below the top of a descending channel pattern on the chart.
Bearish candlesticks and sustained trading below the R1 Pivot Point line expose GBP/NZD to a possible move back to the 2.1100 psychological level where the Pivot Point line is. If there’s bearish momentum, we may even see GBP/NZD revisit its 2.1000 lows.
But if GBP/NZD extends its September upswing instead, then we may be looking at a retest of the 2.1300 channel resistance area. This may lead to an upside breakout that could take the pair above the 200 SMA or the R2 Pivot Point area.
What do you think? Which way will GBP/NZD trade in the next trading sessions?