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GBP/USD – Bearish break in run up to Brexit referendum

FX_IDC:GBPUSD   POUND STERLING / US DOLLAR
Resistance – 1.4284, 1.4352, 1.4514, 1.4627/1.4635

Support – 1.42, 1.4159, 1.4079, 1.40

Five days ago I had written a post on GBP/USD             titled “GBP/USD – Tale of two 23.6% Fibo levels” where I had talked about the pair being restricted to range of 1.4627 (23.6% of 1.7191-1.3835) and 1.4330 (23.6% of 1.5930-1.3835) for six weeks or so. Weekly highs above 1.4629 were seen but on weekly closing basis the pair did not close above the same. On the other hand, sell-off found support around 1.4330 levels.

However, today, the closing is well below 1.4330 levels. It means we have witnessed a bearish weekly close below 1.4330.

On the daily chart , the rising trend line (black) has been breached as well. The bearish closing has happened following the pair’s failure to take out larger falling trend line (red) resistance earlier this week.

Hence, I conclude we have had a bearish break in run up to Brexit. Note, the technical move detailed above is bearish but volumes are quite thin and volatility is likely to remain high. Hence, bears are advised to remain cautious and respect their stops.

Also note the strong resistance at 1.4627 (23.6% of 1.7191 – 1.3835) almost coincides with 1.4635 (38.2% of 1.5930-1.3835). Hence, technical view would turn bullish only in case of a daily/weekly closing above 1.4635 levels.
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