Hi Traders! GBPNZD forecast follow up and update is here. On April 20th I shared this “GBPNZD Technical Analysis And Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea:
On the H4 chart, the price which is moving lower has created a bearish trend pattern in the form of three lower highs, lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently it looks like a correction is happening and the price which is moving higher has created a bearish hidden divergence that has formed between the first high that has formed on 13th April 2021 and the second high that has formed on 19th April 2021 based on the MACD indicator which we may consider as another evidence of bearish pressure. In addition to this, the ADX indicator gave a bearish signal here at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as yet another evidence of bearish pressure. We also have two strong resistance zones that has formed and the price which is moving higher has reached the first resistance zone, respected it and is currently moving lower. There are two possible scenarios from here, the price might move lower from the current zone or alternatively if the price moves higher then the next area to look for bearish setups with bearish evidences would be the second resistance zone.
GBPNZD H4(4 Hours) Chart Current Scenario
On the H4 chart my view was bearish and I was expecting the price to move lower further until the strong resistance zones hold. After the bearish trend pattern, we had a pullback, and the price which was moving higher reached the first strong resistance zone, respected it and moved lower from this zone. The price then moved lower further as I expected it to and delivered 270+ pips move so far.
The market provided us with various facts supporting the bearish view on the M15 chart. On the H4 chart after the price bounced from the first strong resistance zone, we had a pullback. This pullback happened in the form of an ABCD pattern on the M15 chart with the price creating a bearish divergence between the first high that has formed at 1.94260 and the second high that has formed at 1.94540 based on the histogram of the MACD indicator. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view, also there were no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further and provided an excellent move to the downside.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
Currently, on the H4 chart, we have a bullish divergence in play this is something that we need to pay attention to. So if you are still involved in the sells then this is a good place to consider managing your trade and secure your profits (cash out or partial cash out or trailing protections or partial hedge, etc.. depending on the strategy that you work with).
Note: If you want to learn about Money Management you can find it here
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted us and took the right action according to that.
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Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
