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Earlier today I wrote about a 500-pip opportunity on GBPAUD.
It isn’t confirmed yet, but it does appear to be just days away now.
It’s only fitting then to have a similarly sized opportunity developing on the pair’s counterpart, the GBPNZD.
This one is a little more complex though.
We have a few patterns in play on GBPNZD. And when we put them together, we get an excellent view of the pair’s technical landscape.
First up is the multi-year ascending channel that extends from the November 2016 low.
Here’s a view of it from the weekly time frame:
Notice how the channel above has directed the GBPNZD incredibly well since its inception several years ago.
Patterns like the one above are a great place to start.
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But we need to dive deeper to understand whether the market is more likely to retest channel support or resistance next.
After all, more than 2,000 pips separate the two levels.
You could argue that a move higher is likely given the retest of channel support last December.
However, the sideways movement in 2019 combined with the trend line from the January 2018 low paint a different picture.
As you can see from the chart below, GBPNZD is holding below that January 2018 trend line.
Furthermore, the short-term trend line from the December 2018 low creates a rising wedge.
A rising or ascending wedge like this one usually suggests exhaustion from buyers.
Look no further than the one on gold I wrote about on Monday.
For now, it’s going to take a daily close below support near 1.9020/30 to confirm the short setup.
Until then, GBPNZD is susceptible to bounces from short-term support.
Keep in mind too that we have an RBNZ rate decision and statement coming up in a few hours at 9 pm EST.
Considering the volatile that events like those often produce, it may be a good idea to stay on the sideline until the dust settles.
But as always, it depends on your trading style and risk tolerance.
My target following a daily close below wedge support comes in near 1.8400.
Alternatively, a bounce from 1.9020/30 support would have me watching for bearish price action such as a pin bar from the 1.9550 resistance area.