*Live market analysis of the GBPNZD FX currency pair!*
I haven’t done a “pre trade” market analysis post for a while so I thought I would do that for you all to read through and see how I am analysing this currency pair. GBPNZD is a currency pair that is rarely traded by retail traders but occasionally I like to trade it when a larger timeframe market swing set up appears like it has done recently. Let’s look through multiple charts of various timeframes and see what we can find in terms of potential position entries.
Let’s start with the weekly timeframe chart.
Note: As always, all my technical analysis is carried out using the TradingView platform and I highly recommend it to anyone looking for a charting software. Click the link below to go to their website 🙂
On the higher timeframes (weekly & monthly) it is clear to see that price has been moving sideways in a small ascending channel pattern. This is classic price consolidation and is normally expected after such a large bearish move as seen from mid 2015 – late 2016. In those 15 months price dropped over 8000pips which is quite a large momentum move for an FX currency pair.
Currently price is residing above the weekly 50ema but with a consolidation pattern like this, there is a high probability that the previous momentum will continue so a fresh break to the downside would be ideal. Let’s now look at the weekly timeframe chart for the past few months and see what is going on in terms of near term trends.
I have applied the Fibonacci retracement tool to the previous swing high and swing low in order to find where potential resistance may occur and price has now rejected the 0.786 level. Previously the 0.618 level was holding strong but NZD economic data meant this level was breached in early May 2019. If I assume that this last market swing at 2.00 (key psychological level) is to be held as a new lower high then it is safe to assume price will now make its way back down to the lower channel trendline where I will look for a break or bounce.
The daily timeframe chart is tricky because it goes giants my current bearish bias. It is clear to see that price is making higher lows and higher highs on the daily timeframe with a small bullish trendline and the 50ema supporting it. I am therefore being wary that any short positions I enter may be halted by this and that the best outcome would be for price to break this daily bullish trendline and make new lows. That would then mean the weekly and daily timeframe charts are aligned with a bearish bias.
That being said, I am looking to actively short this FX pair on the smaller 4hr timeframe if opportunities present themselves. This is because the higher weekly timeframe is on my side and the daily bullish trendline is still around 150pips away to allow for some decent reward:risk ratio intraday positions.
Let’s look at the 4hr timeframe chart for my current position on GBPNZD and what I am looking to do in the near future.
The chart above shows my current short term intraday position on the GBPNZD FX currency pair. I entered short on the latest lower high on the current 4hr bearish trend. I have marked on the key confluences of this entry with the use of the bearish trendline, 4hr fibonacci 0.786 retracement level and 1.97800 price entry level.
This current position is a short term trade so I will be looking to take profit at 1.9600 which has a strong potential of seeing price reverse at that level. It acted as previous resistance to price so will now in turn become a support. There is also the daily 0.618 fib retracement level at this zone and the 0.618 extension level for the current 4hr fibonacci retracement pattern. These 3 confluences should prove to be strong enough to support price and therefore I will look to take profit there.
Again, this is only my personal opinion on how I want to manage this trade. There is also the option to potentially carry on trading this 4hr bearish trend down to that daily trendline and enter further short positions on any new lower highs that form. I have marked this on the chart below to show you a “prediction” of how price might move over the next few days.
Remember, the daily chart is still showing a bullish trend so until that trendline is broken and new lower lows are made, I think any further downside is limited. Once this break to the downside does happen then the weekly, daily and 4hr charts and trends will all be in alignment and the larger swing trades will be available for me to enter.
TOP TIP: GBPNZD is a very “pip heavy” currency pair so it is important to double check where your stop losses are going to be placed and manage your risk accordingly. You may find you have a stop loss with a bigger number of pips in which case you need to adjust your position sizing accordingly. Use a position size calculator to do this… it is on my Helpful Trading Tools page.
Thanks for reading and I look forward to bringing you more content in later this week! 🙂
DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.