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GBP/NZD traders have been hitting the snooze button for the last few weeks, but this week’s top tier events from both the U.K. and New Zealand make for a prime consolidation break opportunity.

Consolidation Breakout on GBP/NZD?

GBP/NZD 1-Hour Forex Chart
GBP/NZD 1-Hour Forex Chart

On the four hour chart above, we can see the pair is mainly controlled by the bulls, albeit in a pattern of strong momentum rallies after a somewhat long period of consolidation / pullback. October was one of those consolidation / pullback periods, so the odds are pretty good another pop higher (or lower) could be in the cards

We’ll see likely catalysts for that kinda behavior this week, first the quarterly employment update from New Zealand during the early morning Asia session on Wednesday, followed by the Bank of England’s latest monetary policy statement on Thursday. These are both top tier economic events for a currency, so the probability is high we could see action in GBP/NZD this week.

What I’m watching out for is two scenarios. First, a combination of positive NZ jobs update and dovish BOE commentary, plus a break below the major psychological level of 2.000, which was previously a strong resistance area now turned support. That setup will likely draw in momentum sellers and I’ll look for a break-and-retest setup short play then.

Second, if the combination of weak NZ jobs data and relatively hawkish monetary policy comments come from the BOE, a break above the falling ‘highs’ pattern around 2.0200 – 2.0300 is my cue to start working on a long position. If that scenario plays out, I’ll look for a retest-and-hold, or depending on the news, maybe even to hop on long at market given the broad trend higher lowering the odds of a pullback.

What do you guys think? Are you bullish or bearish on GBP/NZD and what’s your strategy to play your bias? Let me know in the comments section below!

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