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FxWirePro: GBP loses ground after UK CPI print, good to short GBP/NZD on upticks

GBP/NZD chart on Trading View used for analysis

  • GBP/NZD slumps lower after UK inflation data unexpectedly misses forecasts.
     
  • UK headline inflation decelerated sharply to 2.4% y/y in September, missing the market estimate of 2.8% y/y rise. The core inflation decelerated to 1.9% in September.
     
  • GBP/NZD is extending weakness for the 5th straight session, trades 0.31% lower on the day at 1.9954 at the time of writing.
     
  • Technical indicators are biased lower. RSI and stochs support downside. We see bearish MACD line crossover on signal line.
     
  • We also evidence bearish divergence on RSI and Stochs which adds to bearish bias.
     
  • The pair has broken below 20-DMA and finds next major support at 38.2% Fib at 1.97612. 
     
  • Retrace above 20-DMA could see minor upside. Breakout at 5-DMA negates bearish bias. 

Support levels - 1.97612 (38.2% Fib), 1.9627 (cloud top), 1.9575 (110-EMA)

Resistance levels - 2.00 (21-EMA), 2.0100 (5-DMA)

Recommendation: Good to go short on upticks, SL: 2.01, TP: 1.9760/ 1.9630/ 1.9575

For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
 

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