GBP/NZD’s nearly 2-month rally dries up ahead of May high.
GBP/NZD after a decisive push north on September 13, fell inches short of the May high of 2.0020, plotting a shooting star suggesting the bears have taken control. The pattern was followed by an engulfing candle, backed by the momentum indicators reflecting a possible top reversal.
The Tenkan-Sen and Kijun-Sen lines have flattened, with the RSI in the overbought region, while the MACD currently deep in the positive area, has already turned down towards its red trigger line. Despite this, the simple moving averages (SMAs) still suggest the positive outlook is in place.
If the 2.0020 high were to hold and the bears dominate, the price could find some hindrance in the drop-down, from the 21-period SMA and Kijun-Sen line ahead of the 1.9630 support. Even lower the nearby 42-SMA could apply some pressure before the price is piloted to a more important support region around the 1.9350 area, where the Ichimoku cloud and 100-period SMA reside. Surpassing this level could drive the price down to the 1.9185 support before the swing low of 1.9070.
To the upside, if the bulls manage to smash through the 2.0020 high, initial resistance could come at the 2.0180 level. If the buy orders pick up, the spotlight could shine on the October high of 2.0465, before considering the 2.0640 level.
Summarising, the short-term bias remains bullish. On the other hand, if the bears manage to push below the 1.9630 level, this could start the shift for a neutral-to-bearish outlook, but a close below 1.9070 would cement it.
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