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Today’s Trading Edge: GBP/USD rallies well above 100-day SMA as Brexit concerns ease

Posted by WorldWideMarkets . on Apr 26, 2016 7:32:15 PM


The British pound has sold off over 10% since Brexit concerns surfaced in December, but since making a key low at 1.3835 on February 29th, price has rebounded over 700 pips.  The latest ICM Brexit polled showed the leaving the EU camp took a small lead with 46% of the vote, compared to 44% who preferred to stay in the EU.  The latest ORB poll went the other way and the staying in the EU received 51% of the vote, while the leave camp obtained 43%.  The UK referendum is scheduled on June 23rd

Price action on the GBP/USD daily chart shows that today’s high accelerated beyond the 100-day SMA.  If we see further strength, price may target the 1.4710 level.  It is around that area that price may form a bearish butterfly pattern.  Point D is targeted with the 141.4 Fibonacci expansion level of both the X to A leg and the B to C move.  If valid, we could see a major reversal back towards the 100-day SMA.  If invalidated, price may find critical resistance from the psychological 1.50 handle. 

The trade: Sell GBP/USD at 1.4710 with a stop loss at 1.4810 and a take profit at 1.4410.  The Risk/Reward Ratio is 1:3

Topics: GBPUSD, Sterling Pound, GBP/USD, $GBP, Sterling, BOE


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