This pair has been on a steady climb so far this year, and it looks like another chance to buy the dip is coming up!
I’ve got my eyes on this simple trend retracement setup on the 4-hour time frame of GBP/NZD.The 100 SMA is safely above the 200 SMA to confirm that the uptrend is more likely to resume than to reverse. The pair is already testing the 100 SMA dynamic inflection point, which might be enough to keep losses in check.
Stochastic is already dipping into the oversold region to signal exhaustion among sellers, but the oscillator has yet to pull up to indicate that buyers are back in the game.
Is a deeper pullback in order?
Using the Fibonacci tool shows that the 61.8% retracement level lines up with a rising trend line that’s been holding since last month. This also coincides nicely with the 200 SMA dynamic support and an area of interest or former resistance that could hold as a floor.
If buyers defend this area, GBP/NZD could find its way back up to the swing high and beyond!
There are no major reports due from both New Zealand and the U.K. economy this week, though, so this might be a market sentiment play. In other words, a higher-yielding Kiwi selloff might hinge on a return in risk aversion.
Apart from that, easing lockdown restrictions in the U.K. might also play a role in lifting sterling against its peers, as this could mean a strong rebound in business and consumer activity soon.
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