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I have written about GBPNZD a few times recently. I even mentioned that it could be the top trade idea of 2019 back on April 26th.
The premise of the idea was a rising wedge pattern.
This particular formation is a bit unique in that the upper level extends from the January 2018 low which previously served as channel support.
Wedge support, on the other hand, extends from the December 2018 low.
If you’ve been following along, you have no doubt noticed that GBPNZD recently closed above wedge resistance.
That’s against the grain of a rising wedge like the one in the chart below.
Typically, a rising or ascending structure will produce a break lower.
But don’t dismiss this wedge just yet.
Sometimes a market needs to make a final push before those in control become exhausted. In this case, I’m referring to GBPNZD bulls.
You could think of it as a “last gasp” from buyers.
However, sellers need to secure a daily close back inside this wedge top near 1.9650 to turn this false break theory into an actionable idea.
Until that happens, attempting to short GBPNZD is a risky endeavor.
We may not have to wait long to find out, though.
The upcoming RBNZ rate decision and statement at 10 pm EST will shed some light on the likely future direction for GBPNZD.
With that in mind, it makes sense to stay on the sideline until the dust settles from the upcoming events.
We don’t have a confirmed short opportunity just yet, and the increase in volatility around 10 pm EST will make conditions less than favorable.
A daily close below the 1.9650 region would expose wedge support near 1.9450 with a break below that opening the door to 1.9050.
Alternatively, as long as GBPNZD stays above 1.9650 on a daily closing basis, buyers are in the driver’s seat.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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