What happened in the markets last week during US presidential election?
The British Pound has been rising since the UK and the EU agreed in December on an orderly Brexit. As the rules are set, the uncertainties about trade vanished and investors can focus on future prospects.
The Pound had been weakening against the New Zealand Dollar all through the transition period, but since December the GBPNZD pair has formed a double bottom pattern. This pattern is a reversal pattern, indicating a high probability change in trend. The fact, that the B leg of the pattern is higher than the A leg, makes the pattern stronger. The pattern has been validated as the price crossed the neckline (C), but pulled back a bit afterwards.
The potential move upwards would be the distance between the neckline and the bottom of B leg, i.e. 530 pips. If the pattern works out, the pair could rise to the 1.9676 target (D). If the course would fall and it broke below the B leg, then the pattern would be invalid.