GBP/NZD Trades in a Steep Downtrend

GBP/NZD traded lower yesterday, breaking below the 1.9780 zone, marked by Monday’s low. Although the pair triggered some buy orders near 1.9620 today, it remains below the steep downside resistance line drawn from the high of February 21^st, as well as below another one, taken from the peak of February 15^th. With that in mind, we will consider the short-term outlook to still be negative.

A clear and decisive dip below 1.9620 would confirm a forthcoming lower low on the 4-hour chart and may initially target the 1.9555 territory, marked by the low of December 23^rd. A break lower could allow larger declines, perhaps towards the low of December 16^th, at 1.9455, and if the bears are not willing to stop there, then we may see them pushing towards the 1.9165 barrier, marked by the low of November 24^th.

Taking a look at our short-term oscillators, we see that the RSI turned up and just exited its below-30 zone, while the MACD, although still below both its zero and trigger lines, shows signs of bottoming. Both indicators detect slowing downside speed and suggest that some further recovery may be in the works before the next leg south, perhaps for the rate to challenge the aforementioned downside line taken from the high of February 21^st.

In our view, the outlook could turn positive upon a break above 2.0126, a resistance marked by the high of February 24^th. This could confirm the break above the downside line drawn from the peak of February 15^th, and may initially target the 2.0220 area, marked by the inside swing lows of February 9^th and 21^st.  Another break, above 2.0220, could set the stage for larger advances, perhaps towards 2.0325 or 2.0425, defined as resistances by the peaks of February 21^st and 16^th, respectively.

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