After a significant drop in British Pound value I have just seen a few signals that shows possibly GBP will be appreciating. Moreover, I have been monitoring NZD and I believe this currency can potentially face a significant depreciation.
Stronger GBP plus weaker NZD, lead us to post this trade, GBPNZD Long.
I would like to talk about British Pound first.
1) See FTSE 100 , It is just reached into a significant resistance and I would expect a bounce. This means cheaper Pound.
2) This is weighted average Pound. It has reached to the lower parallel of the . I would expect a bounce here. This means Pound appreciation.
3) This is UK 10 Yrs Gilt. Opposite correlation with Pound expected. This one has also reached to an overhead resistance.
4) This is UK 10Yrs Yield. Direct relationship expected. This one also reached to a rising . A bounce expected.
5) UK Bond and self-explanatory. A bounce expected. Also has opposite correlation with Pound.
6) I had 5 satisfactory charts on GBP but his one does not look so good. It is Pound . I would expect this one to at least visit the as a resistance. From there we might be able to see uptrend continuation because of other 5 charts above.
Now let’s look at NZD. I expect to see cheaper NZD because of the following reasons.
1) This is New Zealand dollar index and has opposite relationship with NZD currency. It has broken the resistance and currently sitting at that as a support.
2) On the weighted average NZD I have observed a false breakout of the flag and followed by a break on the other side. Now the price is sitting below the lower parallel of the flag (both red and black) and now I expect it heading lower.
3) NZD is the best one. I like this one.
4) NZD yields also heading lower which is what we would like to see.
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If you ever wondered whether this flag will be broken to the down side, I would recommend to see the following which is NZD futures and is exactly the same as above but with broken Flag to the downside. We might see the same thing
Also see how the NZD index broken the resistance and is not carrying up on rising. Opposite relation is expected.
For Yields I think you agree with me. It is heading to the red circle. Right?
Same with Bonds. It is heading up and opposite relation is expected.
Now relax :)
I was just thinking that a lot of candle stick traders gone short below this candle :)
So I would assume if Cable still can’t bounce back against the Aussie, then the Kiwi dollar may have some strength in the early period making the, short term at least, a little tougher. If we get some strong reports on the Pound, everything may change rapidly.