Sterling has ripped by nearly 3% against the US Dollar since last Monday. This was likely from a combination of factors, key of which has been a massive bout of weakness in the Greenback. This has led to an aggressive bear-flag formation in GBP/USD that began to break yesterday, and after bouncing off of a short-term trend-line last night, the pair is working on what could be a lower-high right now.
This opens the door for short-side swing setups in the direction of the previous move (the ‘Brexit fear trade’).
Stops above the 61.8% Fibonacci retracement of the previous major move at 1.4303, with profit targets set to 1.4078 (prior price action swing low), 1.4000 (major psychological level), 1.3917 (27.2% extension of previous major move) and 1.3834 (previous swing low).
--- Written by James Stanley, Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.