NZDGBP drops to lowest close since June 1st
New Zealand Dollar/British Pound (NZDGBP) Technical Analysis Report for Aug 07, 2020 | by Techniquant Editorial Team
NZDGBP finished the week -0.2% lower at 0.5056 after tanking 33 pips (-0.65%) today. Today's close at 0.5056 marks the lowest recorded closing price since June 1st. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (NZDGBP as at Aug 07, 2020):
Friday's trading range has been 48 pips (0.94%), that's above the last trading month's daily average range of 41 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for NZDGBP.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 0.5058 (now R1), which is likely to act as resistance going forward. The last time this happened on Monday, NZDGBP actually gained 0.20% on the following trading day.
While NZD/GBP 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 0.5036 where further sell stops could get activated. Trading close to June's low at 0.5000 we might see further downside momentum if potential sell stops at the level get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Strong Down Move" stand out. Its common bearish interpretation has been confirmed for NZD/GBP. Out of 216 times, NZDGBP closed lower 58.33% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after eight trading days, showing a win rate of 51.85% with an average market move of 0.02%.