The GBPNZD is a massive down trend and it is time we examine this currency pair inside out to see if we traders can capitalize on some of its future movements.
When looking at the week chart the currency pair clearly shows an interesting down trend with consistent lower lows and lower highs for years and years.
The British Pound weakness versus the New Zeeland strength is quite an extraordinary development and has been developing for a very long time:
– the GBPNZD was at 3.5 in the year 2001;
– it is now close to be worth half of the value 12 years ago.
10,000 pips please
The down trend definitely accelerated in 2009 and 2010 when the currency dropped a whopping 10,000 (!) pips.
Yes ten thousand. This is a movement not for the fainthearted.
Everything in this currency pair seems super sized. Even the corrections:
- After this tremendous down fall, the GBPNZD consolidated in a sideways range for roughly 2 years back and forth;
- The purple box shows the bigger consolidation zone. The tops and bottoms of that area were still a whopping 2,500 pips (!) away from each other;
- The blue box shows the more recent sideways range of +/- 1,000 pips.
Just recently both of these consolidation zones have been broken with which seems to be a clear break. The currency broke the bottoms and is now headed straight south.
A development like that should definitely not be ignored. Here is my best Forex advice and my currency Forex strategy plan for the GBPNZD. So my Forex tip at the moment is to keep a close eye on this pair.
4 hour trend
Therefore not surprisingly, considering the strength of the down trend, I am definitely looking for selling opportunities.
When analyzing the 4 hour chart I can see:
1) A very impulsive down trend with clear and subsequent lower lows and lower highs;
2) All the down moves are impulsive of nature and the up moves are highly corrective and sideways –> the down trend is definitely in control on this chart;
3) The currency stopped at the 0.382 Fibonacci retracement level and then continued to the downside;
4) There is a trend line with 3 hits on it (blue line) going to the down side, which is a great confirmation of 4 hour bearishness.
Forex trade plan
My Forex strategy trading plan is to wait for the following:
a) A hook back to the blue trend line and bounce of that line;
b) Candle stick reversal patterns on the 4 hour chart in the area of the red lines.
My stop loss will be above the 4 hour top.
My take profit target is the -0.272 target of the 382 Fib bounce, which is +/- 1.77.
What do you think of this trade idea and Forex trading strategy outline? Let us know in the comment section below.
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