Yahoo Finance 
GBP/USD Technical Analysis: From One Doji to Another
DailyFX.com -
To receive James Stanley’s Analysis directly via email, please sign up here.
Talking Points:
GBP/USD Technical Strategy: Aggressive reversal after last Thursday’s Doji that has now volleyed by more than 700 pips off of the lows.
GBP/USD is expected to stay extremely volatile with low liquidity until at least after the Brexit referendum, and likely until into next week.
If you’re looking for trading ideas that aren’t GBP-related, check out our Trading Guides. And if you want something more short-term in nature, check out our SSI indicator. If you’re looking at opening a trading account, FXCM has a contest at the beginning of next month for certain account holders. Click here for full details.
In our last article, we looked at a symmetrical wedge formation that had begun to build in GBP/USD as we moved nearer to the upcoming Brexit vote; with the top-side of that wedge being defined by a two-year, downward-sloping trend-line. And within a couple of days of that article, we saw the down-side of the wedge give way as fears of a Brexit vote to leave ran high, bringing risk aversion to global markets, led by a tumultous decline in GBP against most global currencies.
But Thursday of last week saw a quick about-face. After moving to just 11 pips above the vaulted psychological level of 1.4000, an aggressive reversal began that saw GBP/USD rocket higher by more than 700 pips, running into the previous swing-high that was set in early May around the 1.4769 level. And price action did set a new high by 12.1 pips before turning around, producing a doji on the daily chart after that high was set.
In a normal environment, a 700-pip incline would be noteworthy in regards to continuation strategies; but what we are sitting in front of is anything but a ‘normal’ market as the world braces for the Brexit referendum that’s now just two days away. Every GBP-pair has the potential for extraneous and chaotic volatility, and this should serve as a threat to traders that might be looking at the potential for volatility as being opportunistic.
Created with Marketscope/Trading Station II; prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
To receive James Stanley’s analysis directly via email, please SIGN UP HERE
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.
