Pound and Dollar Bullishness in Focus Today
NZDUSD Bearish Continuation Pattern | Potential Flag Breakdown
NZDUSD is consolidating around the .7800 major psychological handle for the time being, as dollar trends have taken a pause recently. Price has been moving sideways for almost a week, pending a potential downside break below .7750.
If that happens, the pair could be in for another leg lower, possibly until the .7400 major psychological support zone. On the other hand, an upside break from the current consolidation pattern might lead to a larger market correction. Bear in mind though that the downtrend has been very strong recently, which suggests that any retracement could be a chance for sellers to hop in at a better price.
A pullback might last until the .7900-.8000 zone, which has acted as an area of interest. Reversal candlesticks at this area could indicate that selling pressure is ready to resume and push the pair to its lows around .7800.
Stochastic is still moving higher and hasn’t quite reached the overbought level on its 4-hour chart, reflecting that there’s a bit of buying momentum left. Near-term resistance is at the .7900 handle and near-term support is at .7750, with any breakouts beyond these levels likely to indicate NZDUSD direction for the rest of the week.
EURGBP Pullback to .7900 | Descending Trend Line and Area of Interest
EURGBP has been on a steady downtrend for the past weeks, although a market correction appears to be in the works. Price has found support near the .7750 minor psychological level and has bounced up to the .7850 area, perhaps on its way to test the .7900 major psychological resistance.
Stochastic is already in the overbought zone, indicating that euro bears might be ready to push the pair in selloff mode once more. However, price could still pull up a little higher to test the 50% Fibonacci retracement level which lines up with the descending trend line.
The .7900 mark is located closer to the trend line and former support zone, which might act as resistance moving forward. A higher retracement could lead to a test of .7950, with the .8000 major psychological resistance as the line in the sand for any short-term rallies. Gains past this level could indicate that a reversal is happening.
In that case, EURGBP could be in for more long-term gains, although fundamentals still favor a short bias. After all, the ECB is open to further easing as euro zone data continues to disappoint while the BOE might be switching to a more hawkish bias.
GBPAUD Resistance Turned Support | Break and Retest Forex Setup
GBPAUD has recently broken above a key resistance zone around the 1.8200 major psychological mark. Since then, price has peaked around the 1.8700 handle before retreating to the area of interest.
This is close to the 38.2% Fibonacci retracement level, which might also hold as support in case price pulls back deeper. The 1.7950 minor psychological support lines up with the 50% Fib, which is still within the area of interest and former resistance zone.
However, a break below the 61.8% Fibonacci level or 1.7800 region might indicate that price is starting to reverse and may be in for longer-term losses. A longer-term perspective shows that the pair is on an uptrend but that it appears to be having difficulty making new highs past the 1.8700 area.
Should the rallies resume from the current 1.8300 support levels, price could climb back up to test the 1.8700 region and perhaps make new highs. However, data from the UK has been weak recently, with manufacturing production showing smaller than expected gains and industrial production staying flat.