GBPNZD closes within previous day's range after lackluster session
British Pound/New Zealand Dollar (GBPNZD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
GBPNZD ended the week -2.21% lower at 1.9948 after losing 19 pips (-0.1%) today on low volume. Trading 67 pips higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (GBPNZD as at May 22, 2020):
Friday's trading range has been 117 pips (0.59%), that's far below the last trading month's daily average range of 195 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for GBPNZD.
One bearish candlestick pattern matches today's price action, the Bearish Hikkake Pattern. The last time a Bearish Hikkake Pattern showed up on April 14th, GBPNZD actually gained 1.10% on the following trading day.
After spiking up to 2.0040 during the day, GBP/NZD found resistance at the 200-day moving average at 2.0037. After having been unable to move above 2.0030 in the prior session, the pair ran into sellers again around the same price level today, failing to move higher than 2.0040.
Although the FX pair is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might speed up should prices move below the nearby swing low at 1.9884 where further sell stops could get triggered. With prices trading close to this year's low at 1.9542, downside momentum might accelerate should the forex pair break out to new lows for the year. Trading close to March's low at 1.9822 we could see further downside momentum if potential sell stops at the level get activated.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bearish Intraday Reversal" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for GBP/NZD. Out of 419 times, GBPNZD closed higher 52.74% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 52.27% with an average market move of 0.15%.
With four out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are GBPUSD losing -0.47% and EURUSD closing -0.44% lower. On the flipside the best performers have been USDCAD closing 0.33% higher and USDCHF gaining 0.08%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDCZK surging 1.09% and USDHUF closing 0.9% higher. The worst performers of the day have been USDMXN tanking -0.58% and SGDHKD closing -0.51% lower. Read more