The pound fell broadly against the kiwi dollar on Wednesday taking the price to less than 2.0347 ahead of the RBNZ monetary policy decision which is scheduled for release today during the late US session. The short term bias however is bullish because of higher highs on the 4-hour frame.
As of this writing, the pair is being traded around 2.037. The bears look set to take control and drag the price lower to test the support around 2.027, the 38.2% fib level. Success in breaking this level could open the way to test the support around 2.019, the confluence of 50% Fib level and 200-day SMA ahead of 2.011 which is another confluence of 50-Day SMA and 61.8% fib level of the last leg from 1.9861 to 2.0539, as demonstrated in the following chart. The said level restricted the price on various occasions in the past.
On the upside, a resistance can be noted around 2.0539, the high of December 9 and November 11. Success in breaking this level will make the pair test the potential growth targets that lies around 2.063 and 2.074. The bias will remain bullish as far as the support area around 1.9925 is intact.
RBNZ Interest Rate Decision
The Reserve Bank of New Zealand (RBNZ) is expected to keep the interest rate unchanged at 3.5% for current month as compared to the same cash rate in the month before. Investors will also be evaluating the RBNZ monetary policy statement very closely for the long term direction of the monetary policy.
Goods Trade Balance
The UK’s Trade balance is expected to remain at GBP9.500 billion this October lower than GBP 9.821 billion in the month before, says the average forecast of different economists. Generally speaking, a higher trade deficit reading is considered bearish for pound and vice versa. Thus a worse than expected actual outcome may induce selling pressure in the price of GBP/NZD.
In the light of overall technical outlook, selling the pair around the current levels could be a good strategy if the price leaves a bearish pin bar or bearish engulfing pattern on the four-hour timeframe.
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