GBPNZD is currently finding support at the bottom of its triangle forex chart pattern on the 1-hour time frame. The pair could bounce back to the top of the formation around the 2.0600 major psychological resistance.
However, a return in selling momentum might lead to another test of triangle support at the 2.0400 mark before a stronger bounce takes place. Stochastic is pointing down, indicating that sellers are in control of price action for now.
Forex Chart Setup
Event risks for this forex chart pattern setup include the New Zealand dairy auction later today, which might indicate another increase in prices. If so, the Kiwi could gain a strong boost from the expected recovery in the country’s dairy industry. A downside break might take place then and lead to a potential 500-pip drop, which is the same height as the forex chart pattern.
On the other hand, a downturn in demand and price levels might lead to a strong rally for this pair, which might lead to a move up to the triangle resistance and a potential upside break from the 2.0600 resistance and a 500-pip climb.
Another event risk for this setup is the UK construction PMI release, which might indicate a dip from 59.1 to 59.0, reflecting a slightly slower expansion in the industry. However, a stronger than expected result might lead to more pound gains, as traders anticipate a pickup in production moving forward. BOE Governor Carney is set to give a testimony today and possibly reiterate his recent hawkish remarks, emphasizing that the downturn in price levels could spur spending and growth.
The path of least resistance is to the upside since the PBOC rate cut is currently weighing on commodity currencies these days. Risk appetite is also relatively weak, as traders expect a potential downturn in global growth.
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