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Now that Brexit deal talks are starting to make progress, I’m setting my sights on a potential long pound opportunity on this long-term channel support.

Long GBP/NZD Idea

On its daily time frame, the pair busted through the mid-channel area of interest on its long-term ascending channel. This suggests that a test of the actual bottom could take place before pound bulls resume their charge.

Stochastic is already indicating oversold conditions, though, which suggests that sellers might be feeling exhausted at this point. Big Pippin did highlight an area of interest at the 1.9100 mark after all, so I’m keeping an eye out for a potential rally soon.

GBP/NZD Daily Forex Chart
GBP/NZD Daily Forex Chart

Sterling might be turning a corner now that Brexit frowns are turning upside down. So far, Prime Minister May has been able to get the support of her cabinet in pursuing the draft deal, which is seen to be the go-signal for an EU Summit on Brexit later this month.

However, the Kiwi has been on stronger footing lately, likely taking advantage of risk-taking and the dollar’s shaky performance. To add to that, New Zealand’s latest set of economic reports have also been mostly positive, spurring speculations that the RBNZ might finally be able to shift to a more hawkish stance.

There’s still some ground to cover before the test of channel support, so I’d rather sit tight and see how the situation unfolds first. While there are still several Brexit-related challenges along the way, I’m inclined to think that both the U.K. and the EU would prefer an orderly transition, which would then lighten up a lot of uncertainty and bearish vibes that made the pound heavy.

Do you guys think support would hold or not? Or do you think I might miss out on a big move if I keep waiting?

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