GBP/NZD hits the watchlist as it retests a technical inflection point. Will buyers jump on the pullback to play the shorter-term uptrend or are traders looking for a signal to play the longer-term downtrend?
GBP/NZD Uptrend Pullback or Trend Shift?
Today I’m checking out the price action GBP/NZD as Kiwi bulls charge hard on the session. It looks like traders are reacting to the latest monetary policy statement from the Reserve Bank of New Zealand, who held off from changing its current stimulative policy settings. Traders could be treating this as a positive for the economy, or it could a relief reaction that the RBNZ isn’t reacting to a dip in recent economic updates.
Whatever the case may be, GBP/NZD’S move lower was enough to start breaking the rising ‘lows’ pattern seen on the four hour chart above. Could technical traders take this as a bearish signal on the pair and jump in short? Or will the bulls use this drop as another buying opportunity?
Looking forward, the next potential catalyst for the pair could be the quarterly CPI update from New Zealand, coming on April 21st, and if we see a number above the 0.50% read, the Kiwi could pick up bullish steam. If that scenario plays out, the odds rise that GBP/NZD could return to its longer-term trend lower.
Of course, if that number disappoints, GBP/NZD bulls may take that as the signal to ride the recent uptrend, at which point we should look out for bullish reversal patterns at current levels down to the 1.9150 area.
What do you guys think? Are you waiting for a fundamental / technical confirmation for directional bias? Or are you picking a direction at current levels?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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