In coming week we expect to see the results of many months of negotiations between UK and EU with a view to concluding a trade treaty, regulating the cooperation of these separate economies after 01.01.2021 , i.e. when the UK actually leaves the EU. For several days now, there has been increasing optimism on the conclusion of a mutually beneficial agreement, which could have a positive impact on the pound rate and would support the growth scenario for the GBPNZD pair described below.
High volatility on crosses with the British pound
The GBPNZD pair belongs to crosses with high volatility. After setting on 23.07 minimum of this year at 1.9000, in only 20 session days the price increased by 1250 p, after which it dropped by similar value in the following month.
Such a price ” rollercoaster ” drew a triangle formation on the chart. In the past week, the quotations appeared three times around the support of this triangle, but they did not overcome it, the price is still inside the triangle.
In the four-hour chart H4, we will notice that a candlestick pattern appeared – inside bar.
The price is currently above the formation’s upper limit, which can be considered as a confirmed breakout. The MACD Oscillator has entered the upward phase, which together with the confirmed inside bar break-out is a strong signal for a growth correction. Possible target for demand is 1.9315 where is a S/R -supply/resistance level. If there is a trade agreement and the “no-deal” Brexit stops scaring the markets – increases on this pair are very likely.
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