GBPNZD has been on a strong forex wave pattern uptrend in the past few weeks, as diverging monetary policy biases have driven the pair to the 2.1000 levels. A corrective forex wave pattern is taking place, with the pair pulling back to the Fibonacci levels on the 4-hour chart.
The 38.2% Fibonacci level lines up with the 100 simple moving average, which might act as dynamic support for forex wave pattern price action. The 200 SMA is between the 61.8% and 50% Fibonacci levels, which might also keep any losses in check.
Forex Wave Pattern Forecast
The 2.0000 major psychological level is close to the 61.8% Fib and a former resistance zone, which might act as support. Stochastic is moving up from the oversold zone, hinting at a return of buying pressure while MACD is also moving higher.
An upward forex wave pattern could take the pair back up to the previous highs at 2.1000 while a selloff could lead to a test of the previous support around the 1.9500 mark. From a fundamental standpoint, the bias for this pair is to the upside as the RBNZ has intervened in the currency market to weaken the Kiwi while the BOE is open to tightening policy next year.
The latest BOE decision supports an impulse forex wave pattern, as it indicated upgraded growth forecasts and showed that the central bank is still on track to tighten next year. Of course this could depend on whether or not the minutes due October 22 reflect a change in tone. Carney remains one of the more hawkish central bank heads though, and he might decide to confirm that the BOE is looking to hike rates gradually early next year.
Meanwhile, the New Zealand dollar is still weighed down by weaker commodity prices, particularly in the dairy sector. This could continue to drag milk payouts lower and support a higher forex wave pattern for GBPNZD.
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