Since Brexit the British Pound is down about ~20%. From July to October it has nicely consolidated above 1.28, but ultimately broke down last week. What I do find interesting is following Hollande’s comments exactly where the pound stopped and reversed.
Here is the a longterm view of GBP/USD first:
With a bullish momentum divergence building and price below the 2009 lows, we could potentially be building a false breakdown here.
Next and an important factor to me is the huge long position the commercial hedgers (the smart money) have built and maintain.
Zooming in on the daily, we can see the Pound with its yearly pivotal points. I don’t use these often, but we stopped on a dime and reversed this week following Hollande’s comments (whatever they were). Regardless of him, we can see demand and a nice hammer candle right at the low.
Above S3, or the 1.28, line I want to be long GBP/USD or $FXB for a mean reversion false breadown play. I think we can back above the 2009 lows and that will fuel a rally to the down trendline from 2014 high. Thats about a 15% move. We will evalute further, once and if we get there.
I can’t seem to find any positive news articles about the Pound either, only negative or neutral. I love when everyone has the same opinion.