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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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...If the dots don't connect, gather more dots until they do...




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Sunday, June 19, 2016

British Pound Hovers Precariously Above 30-Year Critical Support

* See UPDATES below...

In advance of Britain's "Brexit" or "Bremain" vote on Thursday, June 23, the British Pound has gained momentum as of last week, and Sunday evening as I write this post.

The current price of the GBP/USD Forex pair is 1.4581, as shown on the Monthly chart below. It will need to break and stay above that level and, potentially retest 1.50, which represents the next long-term resistance level.

A break and hold below the 30-year major support level of 1.40 could have catastrophic repercussions, not only for Britain's FTSE 100 Index, but also other major world indices. Price retested this long-term critical support level last week and is rallying.

Notwithstanding the lower swing low made on the RSI in February of this year, the Momentum indicator has put in a positive divergence, hinting of impending strength in the Pound. Should price continue to rally and retest 1.50, I'd watch to see if the monthly RSI downtrend is broken to the upside, along with a higher swing high on Momentum. If so, we could see a strong continuation rally on the Pound to, potentially, 1.60, or higher.

* UPDATE Thursday, June 23rd @ 7:22 pm ET:

Today, the GBP/USD Forex pair pushed through the above-noted first target price of 1.50 and tagged a high of 1.5018, as shown on the Daily chart below. Price is currently fluctuating wildly as today's "Brexit" voting results come in (700+ pip move today).

The RSI is still in uptrend, whereas, Momentum is consolidating on this timeframe, as markets digest the implications of a catastrophic drop and hold below 30-year major support at 1.40.

I'll post another chart after tomorrow's close...stay tuned and hang on...

* UPDATE Thursday, June 23rd @ 9:35 pm ET:

Nearly a 1,000 pip move, so far, tonight, as shown on the following 4-Hour chart...

* UPDATE Thursday, June 23rd @ 10:50 pm ET:

ZeroHedge tweet..."Biggest drop in pound sterling history"...

GBP/USD 4-Hour chart...

* UPDATE Thursday, June 23rd @ 11:40 pm ET:

ZeroHedge tweet: "Leave Wins: It's All Over As BBC, Sky, ITV Call It A Brexit"...

* UPDATE Friday, June 24th @ 12:02 pm ET:

ZEROHEDGE Tweet @ 12:02 am ET June 24th

* UPDATE Friday, June 24th @ 12:15 am ET:

Thus far, the Pound has hit a low of 1.3304, as shown on the following 5 minute chart...all world equity markets, currencies, commodities, and bonds are in turmoil...

* UPDATE Friday, June 24th @ 1:50 am ET:

The Pound is attempting to rally after hitting a low, thus far, of 1.3231 (a 1,787 pip move in less than 12 hours)...5 minute chart.

Watch to see if RSI can remain above 50.0 and Momentum hold above zero on this timeframe. If so, we may see an extended rally to 1.40 (now major resistance), or higher.

* UPDATE Friday, June 24th @ 2:07 am ET:

ZEROHEDGE tweet: "European Stocks Crash Most In History"

* UPDATE Friday, June 24th @ 11:34 am ET:

A massive Head & Shoulders pattern has formed on this GBP/USD Monthly chart...catastrophe awaits as price flirts with the neckline.

But, the FTSE 100 Index closed the week 234 points higher than last week...Weekly chart below...

...so, while it has not yet experienced the plunge like that in 2007/08, it is threatening to at major support (where it has languished for the past year), as shown on the Monthly chart below.

While volatility remains elevated in world markets, it will be difficult to get an accurate read on firm and sustainable market direction for the foreseeable future...particularly if the Pound remains below 1.40 and the FTSE 100 remains at or below current levels.