I am looking to buy GBP/NZD on a break of 2.37. My stop will be at 2.3555 (145 pips) with a target of 2.4173 (473) pips.
I am labelling this as wave c of iii of an . We maybe haven't got quite enough information to confirm this yet but if it not a wave c it will be a wave 3 so either way I am looking for upside. is holding the 50-40 zone after making a break of the 50-60 zone which helps me look at this move down as corrective.
Fundamentally we have quite substantial NZD event risk today
1) Global Dairy Auction usually between 14:00 and 15:00 GMT
2) Employment Change q/q Expected at 0.5% Previous 0.7% 23:45 BST
3) Unemployment rate Expected 5.9% last 5.8% 23:45 BST
The chart has not behaved as I was expecting. It looks as though the larger wave c (red writing black border) has taken the form of an ending diagonal. If this is the case we will be looking at a substantial correction which should stop after 2.3158.
It is also possible that this is a leading diagonal wave 1 of c. If this is the case we will see a three wave correction from here and a sharp move up into the 2.40s.
The direction it takes will be governed by the Bank of England tomorrow. If they are hawkish we will make new highs and doveish we will drop down. The chart below outlines both scenarios.
I am flat until we get confirmation from the BOE