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On March 18th, I wrote about an ascending channel on GBPNZD.
The pair was trading at 2.0300 at the time and was breaking down from a channel that extends from the July 2019 lows.
That breakdown led to a 1,300 pip selloff.
For the last 14 weeks, GBPNZD has had little to no direction.
However, if you take a step back, it’s actually easy to spot what’s happening here.
As you know from past GBPNZD commentary, we have a massive ascending channel in play from some of the 2016 lows.
The pair has been catching a bid from channel support since July 2019.
On top of that, GBPNZD has carved at least one lower high since it’s year-to-date high in March.
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It now looks as though we have a second lower high that formed last week.
These lower highs after testing channel support are indicative of an imminent breakdown.
But as I’ve said all year, I think it’s going to take a weekly close below channel support to confirm the breakdown.
That level is near 1.9160 as of this post.
Just keep in mind that the two recent lows at 1.9050 could attract some buyers on the way down.
Below that, we have the 1.8300 region.
That will be the first place I’ll look to take some profit on my short trade.
Disclosure: I hold a GBPNZD short position from 1.9473.