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GBPUSD Technical Outlook for 2016

Wednesday, December 28, 2016 12:40 AM GMT

The Pound was dominated by Britain’s referendum.  All GBP pairs naturally were experiencing nervous movements on the day of the vote. BOE was not able to play a catalytic role. On the other hand polls pretty much determined the price action. Indeed poll’s results affected the market’s volatility on a daily basis. Gradually the market was pricing in the Bremain scenario instead of Brexit even though it was very close call.

However the Brexit was the winner and we had an extreme price downfall. Then GBPUSD remained “hostage” of Brexit’s news until the end of 2016.

Let’s have a have look on how Brexit was “captured” on the GBPUSD’s chart:

Many analysts and traders believe historical price action is the best guide for future action. You can easily spot the long term pattern and how the currency likes to move on the weekly timeframe. GBP/USD is currently on the third corrective leg and naturally remains bearish. An obvious structure of Higher Highs and Higher Lows will change the downward bias.

Moving lower on the Daily timeframe, reviewing the 3rd leg and price structure is similar as the weekly timeframe. Sideways consolidation – breaking down in new lows – consolidating and new lows and so on. However the price has yet to retrace above the major swing low of each consolidation (white zones).  When a valid break out is clear above the zone 1.28-1.29 then a potential trend reversal is possible. Therefore the trend still remains bearish quite possibly well into the New Year.

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