After failing to move above the 1.9775 barrier this week, GBP/NZD reversed back down again and, at the time of writing, is testing its key support, at around 1.9475 hurdle. At the same time, the pair is breaking below its short-term upside support line, taken from the low of July 30th. For now, we will stay cautiously-bearish and wait for a confirmation break below the 1.9475 hurdle before examining further declines.
As mentioned above, a drop below the 1.9475 zone would confirm a forthcoming lower low and more sellers could see it as a good opportunity to join in and drive GBP/NZD to the next potential support area, at 1.9370, a break of which could lead the pair to the 1.9287 hurdle, marked by the high of September 11th. Initially, we may see a hold-up around there, or even a rebound. But if the rate struggles to push back above the 200 EMA on the 4-hour chart, or the 1.9475 barrier, this may result in another round of selling, possibly bringing GBP/NZD back to the 1.9287 territory. If this time that area surrenders to the sellers, it may open the door for a further slide to the 1.9115 level, marked by the low of September 12th.
Looking at our oscillators, the RSI and the MACD, we can see that they are currently in support of the above-discussed scenario. The RSI is below 50 and points to the downside. The MACD is also pointing lower, while sitting below zero and its trigger line.
On the upside, for us to get comfortable with higher areas again, a break above the 1.9775 barrier is needed. Only then we will target the 1.9875 hurdle, a break of which could send the pair even higher. This is when the psychological 2.0000 level may get tested, which is marked near the high of September 20th. Slightly above it, at 2.0025, lies another possible resistance zone, marked near the high of May 8th.
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