Trading opportunities for currency pair: due to a growth in dairy prices, the GBP/NZD has broken the 2.3940 support. A further weakening of the pound against the New Zealander to 2.3378 and then to 2.2820 is expected. This scenario will no longer be valid if we see the day close above 2.4158.
The GBP/NZD has been trading in 24th August’s range for 24 days now. For the past four days, the pound has lost 3.32% against the NZD to 2.3789; breaking the 2.3640 support.
Now to why the pound has been losing out and why the NZD is up. Expectation of an interest rate rise by the BoE are down, with rumours going around that the central bank won’t touch its base rate until Q1 of 2016.
The New Zealand dollar is up due to a growth in the Global Dairy Trade (GDT) index and a stabilization of the stock market situation in Asia. The GDT index closed up after three dairy produce auctions were concluded (18/08: 14.8%, 01/09: 10.9%, 15/09: 16.5%). The world’s largest dairy company, Fonterra, has upped its dry milk price forecast by 75 cents to 4.60 dollars per kilo.
What’s interesting at the moment?
Interesting technical pictures are forming on the NZD/CAD and GBP/NZD. This is why I’ve chosen these pairs for today’s ideas. The GBP/NZD has successfully passed the 2.3640 support. The sellers have strengthened below 2.4025 which was a resistance up to 24th August.
So what can we expect from the pair? After a break it’s worth waiting for a further fall. I’ve drawn a downward channel and marked two targets: 2.3378 and 2.2820. The first target is 21st August’s minimum and the second is the lower limit of the channel and the minimum zone from 10th July.
If 2.3378 is reached quickly, expect a sharp recoil. This is purely technical. If the pound falls without looking back, 2.3378 will be too weak a level to hold back sales.
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