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This trend channel pullback setup on GBP/NZD looks too good to pass up!

Or is it too good to be true?

Check out these bearish correction levels:

GBP/NZD: 4-hour

GBP/NZD 4-hour Forex Chart

GBP/NZD 4-hour Forex Chart by TradingView

This pair has been cruising lower inside a descending channel that’s been holding since mid-November.

Another test of the resistance seems to be in the works, as GBP/NZD is bouncing off support once again and retreating to the nearby correction levels.

The handy-dandy Fib tool shows that the 38.2% Fib lines up with the mid-channel area of interest, which might be enough to hold as a ceiling.

A larger retracement could reach the 50% Fib near the 100 SMA dynamic support or the 61.8% level closer to the channel top and 1.9200 handle.

Stochastic is still on the move up to confirm that the correction could keep going for a while, or at least until overbought conditions are met.

Meanwhile, the 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse.

Just be careful since the gap between the moving averages is narrowing, which means that a bullish crossover could happen soon.

There’s not much in the way of top-tier economic releases from the U.K. or New Zealand for the rest of the week, so it makes sense for technicals to play out.

Still, don’t miss out on any major headlines that could cause mood swings for market sentiment since these tend to spur GBP/NZD volatility!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.