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British Pound crosses are finding support.  In particular, the GBPNZD looks ready to rally.

I thought last week that a low may have been in place for the GBPCHF.  That thought was misplaced as the GBPCHF has dropped further still.  Longer term, a drop below the all-time low at 1.7537 is certainly possible given that the rally from that point is in 3 waves.  However, it is also possible that the GBPCHF remains confined to a long term range (between roughly 1.8 and 2.7).   

I wrote last week that “the rally from 1.8653 is in 5 waves, so expect weakness down to 1.9817 before the resumption of strength.”  The decline failed just shy of 1.9817, but the drop is deep enough to consider a correction complete.  Cautiously favor the upside against 1.9922.  I say cautiously because a larger correction may be underway that will not end until below 1.8653. 

Last week’s commentary was “the GBPAUD blew through the downward sloping channel that had contained price since 2001.  Weekly RSI is at 93…an unprecedented level.  A decline, if just corrective, is likely to correct the overbought nature illustrated on the chart above.  Support is at 2.4294.”  The GBPAUD did drop, to 2.3952 before rebounding.  Weekly RSI remains above 70, so additional sideways or downward action seems likely before the long term strength resumes.    

To repeat the longer term analysis that I have held for months; “A C wave is working higher from the low earlier this year.  This advance will most likely exceed 3.0702 within the next number of months.  2.5726 may be a wave ii of 2 low.  A bullish bias is warranted against there although price ideally remains above 2.6420.”  The GBPNZD has taken off as expected and it will probably be just a matter of weeks before 3.0702 is exceeded.  Near term, price should remain above 2.6171.  With the objective over 3000 pips away, this is a solid reward/risk opportunity.

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals  every weekday morning (9 am EST), COT Analysis (published Monday mornings), and analysis of currency crosses throughout the week.  He is also the author of Sentiment in the Forex Market.