In our most recent “Week Ahead” we highlighted daily GBP/USD chart as our Chart of the Week. We discussed hot the 61.8% retracement level from the March 9th highs to the March 20th lows at 1.2510 was initial resistance. The pair still has yet to break above; however, the pair may just be consolidating before a move higher.
Source: Tradingview, FOREX.com
Regardless, today is March 31st, which is end of month and end of quarter. Stock indices are 20% off their lows and there has been a lot of stock re-balancing and window dressing into today. Stocks may be ready for a pullback. If that is the case, many times we see commodity currencies pull back with stocks. Therefore, perhaps we can look at a commodity currency to trade vs the GBP.
If you like the Great British Pound and you don’t want to trade it vs the US Dollar, there are other options to trade it vs different currencies, such as GBP/NZD. On a daily timeframe, we can easily see that the pair spiked to 2.1783 on March 9th, the Monday after Saudi Arabia announced they would pump oil with unlimited supply. The pair then traded lower, in volatile fashion, to the up-sloping trendline dating back to July 30th, 2019, as well as horizontal support. Over the last six trading days (including today) the pair has traded from a low of 1.9948 to today’s highs at 2.0900, a move of over 2.3%. The pair is currently pushing through the 50% retracement level from the March 9th high to the March 19th low near and approaching the spike high from March 19th at 2.10, as well as the 61.8% Fibonacci retracement level at 2.1046. These serve as the first 2 resistance levels.
Source: Tradingview, FOREX.com
On a 240-minute timeframe, the GBP/NZD has already broken higher above a falling wedge and appears to be heading towards the march 9th highs. For support, the first level is horizontal support at 2.0725. Below there, is today's lows near 2.0450 and then the downward sloping trendline near 2.0240.
Source: Tradingview, FOREX.com
The idea here is that if you like a currency to go higher or lower, make sure you always look at different counter currencies which may offer better setups, before you decide on a pair. In this case, if you like the Pound but are a skeptic of the US Dollar, you may wish to trade it vs a commodity currency, such as the New Zealand Dollar.
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