In my previous GBPNZD chart I suggested a potential larger contracting triangle and associated long trade highlighted has developed really well the low. However the price action has now overshot the requirement for contracting triangle upper limits (see chart link below)
Therefore, the contracting triangle is no longer valid, nevertheless in the longer term the outlook for this pairs remains is very bullish, as noted in the comments accompanying the chart. If fact many have been noticing larger inverse Head & Shoulder pattern forming which could eventually lead to much higher prices.
Taking a fresh view of the entire price action to date since the April 2013 low another picture appears. Not entirely sure how to label this but suffice to say that it is an incredibly clear megaphone pattern which can be: 1. Bearish if it is found at the top of the major move. 2. Bullish at the beginning of the move as is the case, in this instance.
However upon completion of this pattern a correction would be in order.
Few points to note are:
1. The price has poked above September 2014 high possibly triggering many stops and could now be vulnerable for a retrace. 2. Most of the recent rise of the low has been fuelled by GBPUSD strength and NZDUSD weakness 3. GBPUSD might also be at critical level with poking above its previous resistance level and several Fib confluence along with accompanying RSI divergence suggesting a retracement might develop sooner rather than later (see chart below). 4.Part of the rise of GBPUSD was accompanied with UK election outcome which now is known and could suggest that now it might take a step back.
Technical Summary:
1. As noted above not sure if this "megaphone" should be an expanding ending diagonal or leading diagonal, but it is clearly seems complete now, which, I have labelled ABCDE but it could have been 1,2,3,4,5. The conclusion is the same in that short term top might develop here and could retrace, may be back to 2.0 or deeper. 2. Price has poked above April 2014 high and may have triggered many stops 3. Level reached also has several Fib projection and extensions with confluence in that zone. 4. Minor RSI divergence on hourly (see chart below) 5. GBPUSD might also be making intermediate top (see chart below) 6. NZDUSD related new out tomorrow might enable a retrace of NZDUSD from oversold level.
However, this is a counter trend trade, hence of higher risk category and should be kept in mind in considering this trade.
Warning: This is my interpretation of price action using TA approach that I consider helps me most, but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.
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Hi Friends, After tonight event, sadly this short is now abandon as the larger trend noted when publishing this charts prevailed.
So whilst retiring this chart for now, I suspect all the stops have been taken out so some sort of retrace will take place. Will wait for clarity to get long as that will be the main trend for quite some time.
Thanks for your support.
anwar.mashni
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This pair is heading towards 2.4 longer term in my opinion
DanV
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Yes agreed in fact longer term even higher levels are possible like 2.7 or so. Thanks for your comment
anwar.mashni
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thank you Dan! looking forward to seeing your next trade on this pair, I've been monitoring it very closely. Cheers!
DanV
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Me too. You are welcome.
DanV
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UPDATE: This pair went little beyond initially anticipated but still with in the limits and it seem that the anticipated top could be in place. Safe to enter short on meaningful retracement with recent high as the ultimate stop. Here is the updated daily chart
IvanLabrie
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EURNZD was simply a safer bet until release of UK data and Carney speaking today...I'm sure the eurozone shorts will start working after NY opens today.
DanV
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Yes indeed. But now both UK & NZD related data are out it could commence setting new course.
HamedAghajani
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With today's spike, will you consider the interpretation still valid? Thanks, Hamed
DanV
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Yes, I think so. Often on larger time frame charts like this you often do get seeming failure.
The first entry did not give the run we anticipated, but today if you look it has attempted to breakout and seem s like it has failed. If correct the we should see stronger decline. Also compared to GBPUSD it has retraced 61.8% of previous decline. So I would not give up just yet but would keep eye for managing risk. Downside could be like 50% retracement of even all the way to previous low. I have entered short again and now stops are at BE on 2/3rd position. Last 1/3rd will enter on confirmation.
So whilst retiring this chart for now, I suspect all the stops have been taken out so some sort of retrace will take place. Will wait for clarity to get long as that will be the main trend for quite some time.
Thanks for your support.