GBPNZD comes to an end of the pennant formation
21 November 2022
In the past few weeks, one of the most technical moves can be seen on the exotic pair of GBPNZD. Currently, we are in the sideways trend, without a proper signal but this should end soon and hopefully, we will be pleased by a new, mid-term, proper trading opportunity.
It all started in September, when the GBPNZD started forming a handsome Head and Shoulders pattern (grey). It took them over one month to finish that formation but finally, at the beginning of November, price managed to break the neckline of this pattern (yellow). Price went lower but there was no panic selling. Instead of that, GBPNZD formed a pennant formation (blue), which locks the price in a sideways trend mentioned in the first paragraph. Interestingly, most recently, the price is moving between two key Fibonacci levels – 23,6% and 38,2%.
How to trade it? Well, price action rules are pretty simple here. Breakout of the upper line of the pennant and the 23,6% will be the signal to go long and price breaking the lower line of the pennant and further the 38,2% Fibo will be a signal to sell. As the H&S pattern started the downtrend, second option is currently slightly more probable.