FxWirePro: GBP/NZD bulls resume with engulfing pattern at ascending channel support, major downtrend intact on shooting star

Last week’s GBPNZD upswings now seem to have been absolutely halted (the week’s rallies show up to 1.17%), the current trend is again going back under the control of bears’ business.

Technical analysis (chart and candlestick patterns occurred): On daily plotting, the pair has been spiking through ascending channel, bullish engulfing pattern candle has occurred at channel support. Consequently, bulls have taken-off the rallies above 21-DMAs.

While both RSI and stochastic curves show upward convergence to the prevailing price rallies but little indecisive at this juncture.

On a broader perspective, the major downtrend that went in the consolidation phase has now continued bearish streaks again (refer monthly plotting), ever since the formation of back-to-back shooting star and bearish engulfing candles at peaks of consolidation phase (Shooting star followed by bearish engulfing pattern at 1.9589 and 1.8518 levels respectively on monthly terms), the bears have managed to hamper the previous bullish swings. 

Overall, the major downtrend retraces 38.2% Fibonacci levels, upon above-stated bearish patterns, bears counter as both momentum indicators in line with the price dips. Currently, the bulls are likely to test strong support at 1.9036 levels (i.e. 21-DMAs), any breach below these levels can intensify the bears in the major terms.

Trade tips: At spot reference: 1.9131 levels, one can still uphold shorts in futures contracts of mid-month tenors with a view to arresting further potential downside risks. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

Alternatively, on daily trading grounds, we advocate trading boundary options spread, using upper strikes at 1.9180 and lower strikes at 1.9036 levels. The strategy is likely to fetch leveraged yields as long as the underlying price remains between these strikes on the expiration.

Currency Strength Index:FxWirePro's hourly NZD spot index is inching towards -67 levels (which is bearish), GBP at 18 (mildly bullish), while articulating (at 05:51 GMT).

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex