Technical Analysis – GBPNZD retraces to 38.2% Fibonacci level after bears deny breach of high
Posted on October 8, 2019 at 3:39 pm GMT
Anthony Charalambous, XM Investment Research Desk
GBPNZD bears are trying to push beneath the 1.9342 level, which is the 38.2% Fibonacci retracement of the up leg from 1.8275 to 2.0000. Dominating sellers corrected the price back down – plotting lower lows and lower highs – concurring with the negative picture from the momentum indicators.
The short-term oscillators reflect strengthening negative momentum. The MACD, although it is in positive areas, has distanced itself below its red trigger line, while the downward sloping RSI has declined into bearish territory. Noteworthy is the downtrend line which is intact and the flat 100-day simple moving average (SMA), which is indicating weakness to the upside, despite the other SMAs’ positive view.
If the bears continue to dominate, pushing below the 38.2% Fibo of 1.9342, the price could drop to test the 1.9200 area where the 50- and 200-day SMAs lie, ahead of the 50.0% Fibo of 1.9135. Lower, the nearby 100-day SMA of 1.9105 could apply some friction before the congested supports of 1.9060, the swing low of 1.8993 and the 61.8% Fibo of 1.8935 can play out.
To the upside, if the bulls resurface, driving the price back up, the downtrend line could be more challenging to breach as it is reinforced by the 20-day SMA, the 23.6% Fibo of 1.9592 and the resistance of 1.9615. Overcoming this could rally the price to the 1.9770 swing peak, before an attempt on the recent high of 2.0000.
Overall, the recent short-term negative bias would be confirmed below the 1.8993 low. However, a break above the downtrend line could restart a bullish run.