GBPNZD has formed lower highs and higher lows to consolidate inside a symmetrical triangle formation on its hourly time frame. Price is testing the triangle bottom at the 2.1200 major psychological mark.

A bounce could take it back to the triangle top close to the 2.1300 mark while a break lower could set off a downtrend that’s the same height as the formation. The triangle spans around 2.1000 to 2.1600, so the resulting selloff could last by 600 pips. Similarly a break above the triangle top could lead to a rally of the same size.

The 100 SMA is below the 200 SMA, though, so the path of least resistance is to the downside or that support is more likely to break than to hold. Price is also trading below both moving averages, so these could hold as dynamic resistance levels.

Stochastic is starting to pull higher from the oversold region to signal a return in buying pressure while sellers take a break. The oscillator has plenty of room to climb before reaching the overbought zone to signal exhaustion among buyers, and a bullish divergence can also be seen since it formed lower lows.

RSI is also on the move up, so price could follow suit as buyers are regaining control. The oscillator has plenty of room to climb before reaching the overbought zone as well.

GBPNZD could take cues from overall market sentiment since there are no major reports lined up from both economies this week. Still, it would be helpful to note that the Reserve Bank of New Zealand just recently shifted to a dovish stance with a surprise rate cut, leading to downside pressure on the Kiwi.

Then again, UK data has mostly fallen short of estimates, particularly when it comes to inflation, so the Bank of England might be gearing up for another rate cut soon as well.