GBP/NZD: The Tale of Two Stories
Weak economic data from the UK exhibits an inherent risk in holding the Pound vs it's Oceanic counterpart.
In my BXY analysis, I speak to, IMO one of the nation's in the G10 that will have the hardest time in recovery next to countries like Italy.
The New Zealand economy has been quiet impressive during the age of COVID-19 and seem to only hiccuped it's way through the lock down. Granted, even the New Zealand economic data is bad, their economy is in much greater shape. The nation was facing some inflationary issues, where as the lock down relived some of that inflationary pressure, causing the interest rate for New Zealand to fall to from 1% to .25%. And, it should be noted that both the XZY and it's sister AXY have both appreciated, ZXY at one point over +3%, on the back of a new Risk On sentiment. Whereas I said it would break down or at least on more week. I was wrong, and instead we see strengthen on the expectations of an improving economy.
Risks for the UK are it's inherent terrible economic conditions since 2008, COVID-19 Recovery and Brexit. Take into account that the UK may also move into negative interest rate territory before New Zealand.
New Zealand does however, face some Geopolitical Risk as China and Australia's disagreement on trade remains intact.
Also, given that the Pound has fallen against the Kiwi to a 3 Month Low flirting with big sell off as it tests the Major Qtr. of 2.000, finding that Major Qtr. and the 13 EMA has support.
Longer-term 100 EMA and 200 WMA has already been broken as the 200 WMA provides resistance to the month of May's price action.
Weekly
The Weekly does indeed show a change in trend starting the week of May 11th as price action breaks the Bullish Weekly Trend Channel, and closing below the Major Qtr. of 2.000 the week of May 18th.
Price Action breaking and holding the Major Qtr, suggested downward pressure to Minor Qtr. 1.97500 where it should find some support, both from the Minor Qtr and the 100 EMA. Shorter-term 13 EMA and 48 WMA shows a pinche of price action durng the week of May 11 throwing the week into a range, but breaking out the week of May 18th.
Daily
The Daily shows price action breaking out of the trend channel and currently sandwiched between the Monthly S3 Pivot and the Major Qtr. 2.000 in which, it has broken and held. We could have short-term rebound, but eventually a move to test Minor Qtr. 1.97500 is likely.
COT Report Shows
GBP for the most part short vs long by over 10%, which is quite the margin. Shorts are up 3.3% from May 12 to May 19 vs Longs 1.0% during the same period.
Kiwi also has a bearish sentiment despite the strengthening of their currency whereas 60.3% are short vs 24.3% long. That is a -1.1% decrease from May 12 for shorts compared to a -2.0% decrease for longs during the same period.
It should be noted, while the Kiwi is also bearish in sentiment, greater so than the Pound, the capital outflows do not suggest they are flowing into the Pound.
What's The moved?
IMO the pair is to be short to test the Minor Qtr. of 1.97500. If 1.97500 breaks and holds then a test of Monthly S4 Pivot 1.95195 in the area of Minor Qtr. 1.9500 will be next.
*This is only speculation and does nor constitute financial advice. That being said there are no projections with a 100% win rate. It also does not take into account any new events that would cause volatility and direction of fundamentals. The rest is up to you!*
In my BXY analysis, I speak to, IMO one of the nation's in the G10 that will have the hardest time in recovery next to countries like Italy.
The New Zealand economy has been quiet impressive during the age of COVID-19 and seem to only hiccuped it's way through the lock down. Granted, even the New Zealand economic data is bad, their economy is in much greater shape. The nation was facing some inflationary issues, where as the lock down relived some of that inflationary pressure, causing the interest rate for New Zealand to fall to from 1% to .25%. And, it should be noted that both the XZY and it's sister AXY have both appreciated, ZXY at one point over +3%, on the back of a new Risk On sentiment. Whereas I said it would break down or at least on more week. I was wrong, and instead we see strengthen on the expectations of an improving economy.
Risks for the UK are it's inherent terrible economic conditions since 2008, COVID-19 Recovery and Brexit. Take into account that the UK may also move into negative interest rate territory before New Zealand.
New Zealand does however, face some Geopolitical Risk as China and Australia's disagreement on trade remains intact.
Also, given that the Pound has fallen against the Kiwi to a 3 Month Low flirting with big sell off as it tests the Major Qtr. of 2.000, finding that Major Qtr. and the 13 EMA has support.
Longer-term 100 EMA and 200 WMA has already been broken as the 200 WMA provides resistance to the month of May's price action.
Weekly
The Weekly does indeed show a change in trend starting the week of May 11th as price action breaks the Bullish Weekly Trend Channel, and closing below the Major Qtr. of 2.000 the week of May 18th.
Price Action breaking and holding the Major Qtr, suggested downward pressure to Minor Qtr. 1.97500 where it should find some support, both from the Minor Qtr and the 100 EMA. Shorter-term 13 EMA and 48 WMA shows a pinche of price action durng the week of May 11 throwing the week into a range, but breaking out the week of May 18th.
Daily
The Daily shows price action breaking out of the trend channel and currently sandwiched between the Monthly S3 Pivot and the Major Qtr. 2.000 in which, it has broken and held. We could have short-term rebound, but eventually a move to test Minor Qtr. 1.97500 is likely.
COT Report Shows
GBP for the most part short vs long by over 10%, which is quite the margin. Shorts are up 3.3% from May 12 to May 19 vs Longs 1.0% during the same period.
Kiwi also has a bearish sentiment despite the strengthening of their currency whereas 60.3% are short vs 24.3% long. That is a -1.1% decrease from May 12 for shorts compared to a -2.0% decrease for longs during the same period.
It should be noted, while the Kiwi is also bearish in sentiment, greater so than the Pound, the capital outflows do not suggest they are flowing into the Pound.
What's The moved?
IMO the pair is to be short to test the Minor Qtr. of 1.97500. If 1.97500 breaks and holds then a test of Monthly S4 Pivot 1.95195 in the area of Minor Qtr. 1.9500 will be next.
*This is only speculation and does nor constitute financial advice. That being said there are no projections with a 100% win rate. It also does not take into account any new events that would cause volatility and direction of fundamentals. The rest is up to you!*
Comment:
Price action showing analysis was good. Not only did we meed the 1.9750, but it broke with ease. Price testing the 1.95000 Minor Qtr. And, a high chance of defeating support.
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