Hello traders! The GBP/NZD price has been consistently moving down during 24-29 June. Price has reduced by 352 pips as it went from 1.9475 down to 1.9122. It has resulted in a 1.81% decline and after the price has tested 1.9122 low, short term consolidation started.
It is clear that the previous area of support at 1.9194 currently is acting as the resistance, which is being rejected. Along with it, the downtrend trendline and 50 Exponential Moving Average is also being rejected. There was a spike produced above the resistance which has reached 1.9228 level. As long as 1h and/or 4h closing price will remain below this price, the GBP/NZD downtrend can be expected to continue.
There are two potential support levels that GBP/NZD might be testing already this week. The nearest support is located at a 1.9100 psychological price and is confirmed by two Fibonacci retracement levels. The first Fibs was applied to the corrective wave up after the breakout of the 50 EMA. The second Fibs was applied to the last point of rejection of the 50 EMA.
The first support is confirmed by 327.2% and 127.2% Fibs at 1.9100. The second support is confirmed by 361.8% and 161.8% Fibs at 1.9073. Therefore, the potential downside move could be between 100-130 pips, and considering that this is relatively small move for GBP/NZD, it could be reached very fast.
In regards to the upside potential, the key resistance level is at 1.9228. 1h and/or 4h close above this price is likely to invalidate scenario with the downtrend continuation and price could start slowly reversing to the upside.
Bias: Strongly bearish while below 1.9228
Potential Resistance Zone: 1.9200 – 1.9230
Potential Targets: 1.9101, 1.9073
Have a profitable trading!