GBP/NZD Correction to 1.9500 Area

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GBPNZD is trending up on its 4-hour time frame and is pulling back to the rising support area that lines with several inflection points. If this holds, price could resume the climb to the swing high near the 1.9800 handle or higher.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse. The gap between the moving averages is widening to reflect stronger bullish momentum.

The 100 SMA also lines up with the 50% Fibonacci retracement level while the 200 SMA is in line with the trend line support and 61.8% Fib near 1.9465.

Stochastic is already in the oversold area to signal exhaustion among sellers, but the oscillator has yet to turn higher to confirm a return in bullish pressure. Until then, the correction could keep going until the lower Fib levels.

RSI also has a bit more room to move south before indicating exhaustion among bears and a takeover by bulls.

Sterling could continue to enjoy support as the UK economy gears up to lift lockdown restrictions from the pandemic. This could mean a strong recovery in business and consumer activity, which would be good for overall growth. There are no major reports up for release from the UK this week, so traders might take cues from updates on the vaccination efforts and reopening plans.

Meanwhile, the Kiwi has no major catalysts to look forward to this week, so price action could hinge mostly on market sentiment. Risk appetite could be bullish for the higher-yielding currency and might even spur a break below the trend line support. A return in risk aversion, on the other hand, could spur a bounce for GBPNZD.

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