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The GBPNZD is one currency cross that I don’t discuss often. Like some of the other New Zealand and Australian dollar crosses, the GBPNZD is known to be more choppy than some of the other pairs even while trending.
However, I still keep an eye on the pair because every once in a while it does something that catches my attention.
In this case, the cross is testing a trend line support that has been in place since August of last year. You can see from the second chart below how the GBPNZD has started to “lean” on this support level with increasing frequency in recent weeks.
That’s often a sign that the market is about to break through a level. It suggests that bids are becoming increasingly scarce along this trend line that began nearly seven months ago.
Now, if we take a step back, we can see where the GBPNZD may gravitate to if the 1.9020 area breaks down.
The trend line above has been in place since the 2016 low. The level served as support on four separate occasions but hasn’t revisited it since last July.
That could be an indication of a move lower over the next few months.
Just keep in mind that a retest of the 2016 trend line shown above will take weeks if not months to play out. It will also likely involve a lot of back and forth price action on the way down, so be sure to set your expectations accordingly.
For now, I’m waiting to see if we get a daily close (New York 5 pm EST) below trend line support near 1.9020. If we do, I will consider opening a small short position following a retest of the level as new resistance.
The next key support levels below 1.9020 come in at 1.8800 followed by 1.8610.
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