In our last report about the GBP/NZD we recommended buying the pair, keeping our first target at 1.7765. The pair already hit the target and recorded the highest price at 1.7964, which is the average price for the last 50 days, but it declined again to trade now at 1.7700, especially today after releasing the negative data for the CPI from the UK, which is a decline to 2.6% from the previous level at 2.9%.
The pair is trading now in a tight area inside a price channel on the H4 chart, the heading of the lower limit. The pair broke the SMA in the previous candle, so now we should ask ourselves where the pair will go after the breakthrough.
This channel is a continuous pattern and the previous wave was down, so we predict that the prices will break the channel down to touch the uptrend line at 1.7310. The Stochastic indicator is heading the 20 level, so it’s still giving us a sell signal.
The Next Few Days
From this analysis of the H4 chart we can sell the pair now at the current levels at 1.7700 and keep our target at the lower limit of the channel at 1.7550. We need to wait to see what will happen. If we see a breaking downward, then we can sell again to 1.7310. If we saw the pair make a bullish candle inside the channel, we can take buy positions and keep our target at 1.7950.
This week doesn’t have much important news from the UK or New Zealand, except for Mark Carney’s speech today and the retail sales data from the UK on Thursday.
