By: Mike Kulej
Last week’s sell off in commodities had a similar effect on some of the currencies. In particular, the Australian, Canadian and New Zealand Dollars lost ground. The biggest beneficiary was the US Dollar, for once, but a few other currencies also registered smaller gains.
The British Pound, while not very strong, managed to stage some gains in relation to the New Zealand Dollar. On the intermediate term chart, the GBP-NZD pair had been building a bottom during the previous couple of weeks and started to move higher on the NZD weakness.
This rally has relatively short advances followed by deep pullbacks. Currently the price appears to have found a support before making another move up. It is a multiple support, provided by the trendline, the SMA and the Ichimoku cloud, which greatly improves the chances for the 2.0600 level to hold.
In addition, the %R Indicator has an oversold reading. This indicator works quite well in market conditions without prolonged one-sided moves, like right now. All these factors suggest the GBP-NZD should rally from the current level, perhaps to 2.1000, and, with time, even higher.