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GBP/USD – Hammered but doors remain open for a rebound

FX:GBPUSD   British Pound / U.S. Dollar
Markets were caught off guard today by Brexit vote victory. As said in the GBP posts yesterday, markets were expecting Bremain and hence had positioned themselves for the same.

No wonder, Cable was trading at 1.50 in early Asia today.

What this also means is the drop in the Pound isn’t serious. A few days ago Cable was hovering at 1.40 before the ‘Bremain’ rally was set in motion by polls released over the weekend.

When viewed in this light, the drop in the Cable looks moderate. The pair printed a 30-year low of 1.3226 today.

Bearish Cypher on monthly chart

We still see a possibility of the pair completing a Cypher formation if the monthly closing is above 1.3478
As per Cypher rules, the Leg BC             of the Cypher should not close beyond the 1.414 projection of the XA leg. 1.414 projection value is 1.3478. Hence, a monthly close above the same would leave the doors open for a rebound in coming months and a possible rally to point D which stands at 0.6343.

This is not a trading call, but an anticipation of a possible move.

Note, the pair could take out 1.30 handle if the Brexit leads to political/Economic turmoil in the UK. Moreover, BOE then would be forced to cut rates.
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