During the day on Wednesday, we went back and forth during the course of the session on Wednesday, as the market should continue to see quite a bit of bearish pressure on the British pound in general. While the New Zealand dollar is a necessarily the most positive currency out there, I think this chart shows just how much trouble the British pound is in at the moment. After all, the market has been very “risk off” while the New Zealand dollar seems to revel in that type of attention. The New Zealand dollar of course is highly sensitive to the commodity markets and of course risk appetite around the world, so the fact that the British pound continues to remain very soft compared to this currency shows just how poorly the British pound is doing.
Massive bearish candle
You can see that the 2.00000 level offered quite a bit of support previously, and the so-called “Brexit” decision sliced right through that area like it wasn’t even there. In fact, we went all the way down to the 1.900000 during the day. Since then, we have essentially gone sideways, so I think that the markets very comfortable in this low level. I think if we rally from here, we could turn right back around and selloff on signs of exhaustion. I also believe that a break down below the bottom of the hammer from a couple of sessions ago would be a nice selling opportunity.
The size of the candle is very negative, so having said that I believe that the markets will have quite a tall order ahead of them in order to break out to the upside. I believe that the 2.00000 level is now essentially the “long-term ceiling” in this pair, and I believe that longer-term trades can now be made due to this level. An exhaustive candle on the daily chart, or even the weekly chart would be a nice set up for a long-term short.
