H4 chart presents an interesting situation on pair GBPNZD. Firstly, this pair is currently in an uptrend, and the second we have an on-going correction of recent increases.
As you can see the correction reached the support level at 1.7710, which was previously resistance. In addition, we have a coincidence of the 20-period SMA, which provides dynamic support here. We are therefore in a good place to look for signs of a return to growth.
For traders using price action signals ,a bullish signal can be the pin bar, which closing takes place above the level of support. However, I would suggest a slightly different look, and for this purpose we need to move to the 30-minute chart.
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Precisely on M30 chart we can look for classic signs of the end of a downward correction. A classic that means that is based on a system of lows and highs. If the chart shows the sequence of higher low (HL) – higher peak (HH) it may mean a return to bullish trend. Example of such a system is shown below:
A potential signal may be creating the peak (H), and then the position can be secured below the first higher low (HL) or below the last low (L). More conservative traders may however wait for the breakout of higher high (HH) and secure position in one of the local lows.
The first target for this scenario is shown in the resistance near 1.7830, and key resistance is higher, at 1.7950.
