Trading opportunities fir currency pair: the GBP/NZD reached the support. A rebound to 2.3084 is expected and a new downward impulse with a 2.2136 target could form from there.
The last idea I did on GBP/NZD was last week on 5th October. A weakening of the pound to 2.3378 and 2.2820 against the New Zealand dollar was expected along a downward channel. On 5th and 9th October, the targets were met. My idea from 28th September came off. Now we can consider new ideas.
We can see clearly on the daily graph how the GBP/NZD has been falling for 5 days. The BoE convened and decided to leave its base rate unchanged at 0.5%, whilst keeping asset purchases at 375 billion pounds. Eight of the 10 Monetary Policy Committee members voted to keep the rate as it were. Ian McCafferty voted to put the rate up by 0.25%.
On Thursday the UK pound reacted to the above mentioned monetary policy decisions by losing 60 points against the dollar since no more MPC members voted for the rate to be increased and the meeting’s minutes indicated that Q3 GDP for the country is 0.1% less than in Q2 and stands at 0.6%. Inflation is to remain below 1% until Spring of 2016. We could presume that the BoE is set to put its rates some time in Q2 of 2016.
The New Zealander is up after a successful passing of the Global Dairy Trade (GDT) auction and a growth in oil prices. The AUD/USD and NZD/USD currently have a positive correlation with oil. Brent was up 9.57% last week to 52.43 USD. The GDT index saw a 9.9% increase.
What’s interesting at the moment?
The earlier targets have been met. The GBP/NZD didn’t make it to the lower limit of the downward channel. The week closed in a zone which corresponds to 10th July’s minimum and a fibo level of 38.2% of the growth from 1.9303 to 2.4996.
Dairy prices are up. The BoE’s Mark Carney couldn’t make the quotes do a U-turn. Due to this, a new target of 2.2136, 50% of the 1.9303 to 2.4996 upward movement, can be set.
UK data on retail sales and manufacturing prices for September is out on Tuesday and Wednesday will see labor market data out. Weak values for any of this data will pile pressure on the pound.
So what trades should we make on Monday? I don’t think it’s worth making any moves today. Monday is always contradictory no matter how you look at it. It’d be ideal to enter the market after a rebound from 2.3084. Here we need to look at the type of pattern along which the recoil will take place. The pound is forming a complex pattern from 2.4608 (21st September). We can see a bearish impulse on the daily and there is a pattern with interim X waves at 4H.
Why not take advantage of the improved version of the Trader’s Calculator.