Hello traders! Today we might be witnessing a decision-making point for GBP/NZD. Obviously there are only 3 possible scenarios; Long term uptrend continuation, consolidation or a downside correction. At this point talking about trend reversal would not be appropriate as there are no signs of a downtrend. On a weekly chart, we can clearly see that the trend is up. Although today’s price has reached the supply zone, where price has been dancing around for several months.
If the resistance at 2.0560 will hold, with no weekly close above, the probability of the strong downside correction will increase substantially. If that will be the case, the price might drop sharply next and the following week, towards 50% Fibonacci retracement level at 1.9343.
On the 1-hour chart, we can see that GBP/NZD has reached and rejected the 78.6% Fibs retracement cleanly. At the same time, the downtrend trendline has been rejected, and up until now there was no clear break and close above the point of rejection at 2.0514.
Overall, considering current price action, GBP/NZD is expected to correct down to a 1.9350 area. This level corresponds to the 50% Fibonacci on a Weekly chart, and 161.8% Fibonacci on a 1-hour chart.
Bias: Sideways to bearish while there was no 4h close above 2.0560 resistance.
Potential Resistance Zone: 2.0560 – 2.0600
Potential Targets: 1.9350
Have a profitable trading!