GBP/USD wait for retracement first

June 27, 2016 09:16

The GBP/USD fell sharply making 30 year lows(!) due to Brexit referendum result. We shouldn't be shocked with the price movements as it went in according with our pre fact analysis and expectations. Another thing to pay attention is that the market follows our updated and early market analysis but we need to be very careful and not blindly short the pair just because everyone is doing that.

Technically BOE intervened around 1.3225 level so at this point 1.3225 is the barrier towards 1.3000- psychological support. The range has been huge (as the pound kept dropping during Brexit referendum voting) so technically we want to see a retracement. We have 3 zones where the price might possibly react. The first zone (red line resistance) is 1.3470-80 and the price might drop from there without any retracement if equities start to get bearish. POC1 is 1.3620-50 zone (retail gap, 23.6) while deeper retracement POC2 goes to 1.4120-50 (H3,EMA89,50.0). POC2 should be eyed only if BOE intervenes as the price flow is unlikely to reach it without a CB intervention. Only below 1.3225 we can expect 1.3170 and 1.3000.

So shorting the rallies is the option but first wait for retracement.

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