Background: Is that it? A slight tremor in Brexit poll results may has given the Remain side the lead but is the seismic shift in GBPUSD sentiment warranted? The Financial Times poll of polls, as of June 20 has the vote tied at 44% each which is still a coin toss. Absolutely nothing has been resolved, yet
GBPUSD has climbed from 1.4008 on Thursday to 1.4667 on Monday.
The rally has stalled at resistance in the 1.4690-1.4770 zone which represents a downtrend line from September 2015, another downtrend from the end of December, both of which guard a double top from May.
That implies that there is ample ammunition for a massive move in either direction when the Brexit results are known. It also means that there is lots of room for additional movement on poll results prior to Thursday.
The magnitude of the GBPUSD rally and the proximity to long -erm resistance suggests that the Monday rally is vulnerable to a correction
Management and risk description
This is a risky trade has neither fundamentals or technicals have any real bearing on GBPUSD movement. All moves a poll-fueled which will be the case until the referendum results are tabulated. This trade is based on the idea that the rally is overdone and that GBPUSD will consolidate at lower levels ahead of Thursday.
Entry Sell 1/3 of usual position size of GBPUSD at market (currently 1.4657) 1/3 at 1.4720 and 1/3 at 1.4770 – If all orders completed, the average rate is 1.4715.
Time horizon Close of business June 22, 2016
Chart GBPUSD 30 minute with take profit level noted
Source: Saxo Bank
Chart GBPUSD 4 hour with Fibonacci retracement levels
Source: Saxo Bank
Chart: GBPUSD daily with long-term downtrend and stop loss shown
GBPUSD 5 year daily with moving averages
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more