Last week on Wednesday, we saw GBP/NZD rebounding sharply back to the upside from the 1.9070 area, where the pair found its floor, and then it moved on higher and hit strong resistance near the 1.9455 barrier. Since then, the pair started moving sideways and by the looks of it, GBP/NZD is now forming a flag, which means that there is a possibility to see a further acceleration of the rate. But until GBP/NZD breaks the upper side of the so called “flag”, we will remain neutral and just observe the price action for now.
We can see that GBP/NZD continues to move sideways and is currently stuck in the middle of the flag. The problem here is that we don’t know when exactly the pair could come out of that formation. If GBP/NZD decides to break the upper side of the formation and closes above the 1.9455 level, then this could confirm a possible move towards higher levels. The first good resistance zone could be seen around the 1.9525 hurdle, marked by the inside swing low of the 16th of July. If that doesn’t hold the pair down, then next potential resistance could be near the 1.9580 level, which stopped the rate from moving higher between the 13th and the 17th of July. Slightly above that lies another good area of resistance at the 1.9620 barrier, marked near the highest point of July.
Alternatively, a break through the lower side of the flag formation, could open the way towards some lower support levels. The first good one to watch could be the 1.9300 zone, marked by yesterday’s low. Below that lies the 1.9273 area, which was the low of the 10th of August. If the bears remain in the driver’s seat, they could force the pair to go all the way to the 1.9195 obstacle, which acted as strong support on 7th of August and the 18th of July.
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