In our last article about the GBP/NZD on April 25 we recommended buying the pair at 1.8400, keeping our targets at 1.8550 and 1.8700. The pair recorded its highest level at 1.8945, which means our targets have been achieved and surpassed by more than 540 pips in less than 20 working days.
Today the pair is trading around 1.8750 above 38.2% Fibonacci from the big downside wave that lasted from May to October last year. The pair is trading inside the price channel for the correction wave and is expected to reach the 50% Fibonacci before resuming the downside wave, because it's possible that the pair will break the channel down and decline again after forming the continuing Flag Pattern.
The Next Few Days
Based on this analysis of the daily chart we can buy the pair now at 1.8750 and keep our target at 50% Fibo at 1.9290. Then we should wait for a bearish price action candle like a Pin bar or an Engulfing candle to sell the pair and keep our first target at 1.8360, with a second one at 1.7900 and wait again to see the channel breaking down.
This week we don't expect much news from the UK or New Zealand except for reports such as the PPI from New Zealand and Retail Sales from the UK, so be careful about any unusual news that can change the market's direction.
