I’m still keeping an eye on GBP/NZD for this trading session, and this time I’m waiting for a break-and-retest play.
The pair broke above the area of interest we were looking at yesterday, so a new trend could follow from here.
But first, here are headlines you’ve missed during the Asian session:
Fresh Market Headlines & Economic Data:
- U.S. crude oil stockpiles rise 1.4M barrels vs. 1.2M forecast
- New Zealand trade surplus widened from 1.34M NZD to 1.25M NZD
- Japanese all industries activity index
- Chinese banks closed for the holiday
- Australia reports biggest one-day increase in coronavirus cases in two months
Upcoming Potential Catalysts on the Economic Calendar:
- German GfK consumer climate index at 7:00 pm GMT
- U.K. CBI realized sales index at 11:00 am GMT
- ECB monetary policy accounts at 12:30 pm GMT
What to Watch: GBP/NZD
There’s not much in the way of top-tier catalysts in the upcoming London session, so I’m betting that risk sentiment could be the main driver of price action.
Traders seem to be in no mood for riskier holdings these days as the market focus has been on the resurgence in the number of confirmed coronavirus cases.Because of all that downside pressure on the higher-yielding Kiwi, GBP/NZD managed to break above a short-term falling trend line to signal that buyers have the upper hand.
A correction from the rally is taking place, and the pair is finding support at the 38.2% Fibonacci retracement for now. A larger pullback could retest the broken trend line closer to the 61.8% level, especially while Stochastic has some room to head south.
If any of the Fibs are able to keep losses in check, GBP/NZD could recover to the swing high near the 1.9500 mark.
Planning on taking this potential bullish setup? Don’t forget to look at the average GBP/NZD volatility when setting exit levels!