I haven’t mentioned GBPNZD since March 18th.
At the time, we were watching for a break below a smaller ascending channel for a run at the bottom of a much larger pattern.
Here’s the chart I posted on the March 18th:
Fast forward to today, and GBPNZD has trended lower as anticipated.
The breakdown in early May led to a retest of the 2.0440 area as new resistance.
Since that time, we’ve seen GBPNZD slide lower by more than 1,200 pips.
But the more significant breakdown has yet to occur, in my opinion.
A look at the monthly time frame illustrates why I think so.
In the last twenty years, GBPNZD has experienced two multi-year declines that spanned between 12,000 and 13,000 pips.
If we treat the channel above as a bearish flag pattern, the measured objective comes in around 1.2500.
What’s fascinating is that 1.2500 is approximately 12,800 pips from the August 2015 high, which was the start of the current downtrend.
Is that a coincidence?
Maybe, but it does give me more reason to believe that a weekly close below that 1.9000 area would send GBPNZD much lower.
Key support below 1.9000 comes in at 1.8300.
Alternatively, a bounce from the 1.9000 support region would likely encounter sellers near the 1.9400 area.