The GBP/NZD has been a fairly new addition to the currency pairs on my watch list. It made its first appearance in my w/e analysis back on April 26th of this year. Back then I was urging traders to focus on the breakout 2.10 level. Well price has rallied over 2,000 pips since eventually making that breakout and has been a huge trade in its own right BUT the GBP/NZD is now at another critical level. This new level may prove to be the gateway for the next big move by way of either a significant bullish breakout or reversal and is therefore worth taking a look at.
This was the monthly chart of the GBP/NZD back at the end of April when I first posted about this pair:
My focus back then was to watch for any bullish breakout above 2.10 for confirmation to long. Price did eventually break this level but didn’t really look back from there and has continued to rally as the weekly chart reveals:
So, fast forward 2,000 pips and price action is now negotiating another major resistance zone being a 14-year duration bear trend line. A monthly break and hold above this trend line would be rather bullish and suggest a significant polarity shift for this pair. Placing fibs on the last major swing low move from 2008-2013 may help to identify potential bullish targets and reveals that the 50% fib is above current price near 2.39 and the 61.8% fib is near 2.53 with the monthly 200 EMA between both of these and at 2.45:
This major monthly bear trend line noted above dove-tails in nicely with the top of the monthly Cloud too. Thus, this is a significant region for this pair and I would expect to see some reaction by way way of choppy price action around here whilst the GBPP/NZD negotiates this major demarcation zone:
The potential for bullish continuation here sits in comfortably with what I’m seeing across other GBP based currency charts. In short, the GBP looks to be quite the stand out currency at the moment. Not so much because it is forging ahead by leaps and bounds but, rather, because many of the others, the USD, AUD and NZD, are simply slipping behind!
Thus, this 2.30 region on the GBP/NZD may prove to be the next major demarcation zone for the GBP/NZD and is the key level to watch in coming sessions and, as well, as the month draws to a close. This 2.30 level could be the gateway for a major move with this pair:
- a monthly break and hold above 2.30 would be a bullish signal and support continuation whilst at the same time suggesting a significant polarity shift for this pair.
- A respect of 2.30 would be bearish and suggest continued consolidation within the triangle and, perhaps, a move back down to test 2.10 again.
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