The current move this week is derived from the big break point at 1.4420 an 1.4360’s. The current points are now located at 1.4428 and 1.4368. Inside the current move is a big base formed at 1.4610. Shorts must break 1.4610, 1.4428 and 1.4368 to see GBP far lower.
Current price at 1.4700’s is done on the topside. A deep correction is not only warranted but any moves higher from 1.4700’s must be derived from Brexit because no reason exists to take GBP higher from current altitudes. Up to this point at 1.4700’s, Brexit lacked any factor to current prices but rather the 1.4400 to 1.4700 move was normal in all regards.
If 90% correlated GBP/USD to GBP/JPY is included then GBP/JPY faces tough Resistance points at 155.81 and 155.73. The point at 155.73 is today’s range point and a break opens the flood gates higher to 157.00’s.
Mentioned GBP price dead on the floor at 1.4400 and 1.4500’s. Current price is now at the BOE favorite location and that is equilibrium. Means price overall in the longer term picture is well balanced. This well balanced approach is also the NZD and RBNZ model and adopted way back in the 1980’s when NZD free floated and broke from age old GBP and London Pegs.
GBP/USD Bottom today 1.4686 and achieves this destination by breaks at 1.4723 and 1.4704.
Upper targets 1.4796 and 1.4793. Watch closely 1.4774 as another tough point and reversal.
Range breaks above 1.4912, 1.5064 and below range breaks 1.4610 and 1.4463. 1.4400’s will be rough break points in days ahead.
Brian Twomey, Inside the Currency Market, btwomey.com