Trade of the Day: GBP/NZD

By: Dima Chernovolov

GBP/NZD continues to fall inside the 4-hour Up Channel chart pattern which was recently identified by Autochartist. Autochartist measures the quality of Up Channel at the 5-bar level – which is the result of the slow Initial Trend (1 bar), above-average Uniformity (46 bars) and strong Clarity (8 bars). GBP/NZD is expected to fall further inside this Up Channel – in line with the earlier downward reversal from the resistance area highlighted below.

As can be seen from the daily GBP/NZD chart below – the top of this Up Channel formed when the price reversed down from the resistance area lying between the key resistance level 2.0430 (high of the previous Shooting Star from December) and the upper daily Bollinger Band. This price zone is acting as the resistance area after it was broken. The proximity of this resistance area increases the probability GBP/NZD will continue to fall inside this Up Channel.