In today’s technical analysis, let’s take a look at the British pound versus the New Zealand dollar. Earlier today, the pair briefly printed new multi-time lows, but that weakness was followed by a sharp intraday rebound from extremely oversold levels.
Over the past few sessions in February, price has been respecting a local horizontal support zone marked in orange, located slightly below the 2.26 area. This level was tested repeatedly on February 3rd, 5th, and again on February 6th, confirming its technical relevance. That support zone became the key reference point for short-term price action.
At the start of the new week, the market opened with a decisive bearish move. Price broke below the orange support, but the breakdown failed to gain traction and was quickly reversed. This behavior creates the conditions for a potential false breakout, marked in red. False breakdowns at such extended levels often lead to corrective bounces, especially when sellers fail to maintain momentum.
As long as GBP/NZD remains above the orange horizontal support, short-term sentiment is slightly positive. However, it is important to keep the broader context in mind. This move is counter-trend, as the dominant medium- and long-term trend remains clearly bearish. Because of that, upside potential should be treated as corrective rather than trend-changing, and the probability of renewed downside remains higher.
If price closes today back below the orange support zone, that would invalidate the false breakout scenario and generate a fresh signal to sell. Such a move would confirm that sellers are still firmly in control and that the broader downtrend is ready to continue.