GBP/NZD has been trending down for quite some time, and soon this tendency can continue. Although before that, there is a final drop to be made, as long as 2.0000 resistance is holding.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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Trade Idea Details:
GBP/NZD symbol
Type: Bearish
Key support levels: 1.9646, 1.9550
Key resistance levels: 1.9900, 2.0000
Price Action: On the Daily chart GBP/NZD broke below both 200 Moving Averages, Simple, and Exponential, suggesting further price weakness. Then the price corrected up and rejected the 200 SMA, which was acting as the support. Followed the MA rejection a new lower low has been produced and then key psychological resistance at 2.0000 was rejected. This is a strong indication of bearish domination, which should push the price towards the 1.9550 area which is confirmed by two Fibonacci retracement levels. 88.6% and 261.8%.
On the 4H chart, there is a very clear downtrend and perhaps we are about to witness the final wave to the downside. The downtrend trendline was rejected along with the 161.8% Fibs at 1.9900. Price attempted to break above, producing the spike and hitting 2.0000, although it failed to close a higher 161.8% resistance. It makes 2.0000 a key psychological resistance level.
Potential Trade Idea: Wait for the 1H candle to close below 1.9855, which should be the trigger point for the selloff. Alternatively, wait for the pullback towards the 1.9900 resistance, which would be an ideal entry point for selling. The stop loss could be placed just above the 2.0000. The take profit, which is confirmed by two Fibs could be at 1.9550.
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