GBPNZD has had one heck of a run since the April lows. For a pair to gain more than 4,000 pips in a three month period is an impressive feat, even for the likes of GBPNZD.
That’s all well and good, but the real question becomes, does the “buy the dip” mentality still carry any weight?
If we use simple technical analysis to validate the strength of the current trend, the answer is, yes. At the moment we have two levels that give credence to the idea that higher prices are likely in the short-term.
The first level in focus is the 2.3370 horizontal level. This area acted as resistance in early July and has since supported the pair on a recent retest of the level as new support.
The second level comes in the form of channel support off of the April low. This level is well-worn having been tested four times over the past three months.
GBPNZD daily chart
As for resistance we have the 2.4100 area, a level that acted as both support and resistance between August and September of 2009. However the bigger level here is 2.4470, a price I’ve had my eye on since early May.
Summary: Wait for a 4 hour close above the resistance level shown below and then watch for a buying opportunity. Key resistance comes in at 2.4100 and 2.4470. Alternatively, a close below channel support would negate the bullish bias and open up the possibility of a move lower.
