Home > GBPUSD – A Technical Perspective After Brexit

GBPUSD – A Technical Perspective After Brexit

Much has been written about the British Pound (GBP) in the aftermath of the Brexit referendum in the last four years. Now that Brexit finally happened and we can all move on with our lives, it is as good a time to have a look at the bigger picture on the most important GBP pair – the GBPUSD. 

In the meantime, since the Brexit referendum, a pandemic hit the world. However, both events so far pale in importance when compared to the drop in the GBPUSD during the 2008-2009 Great Financial Crisis (hint – see the extreme left on the chart below).

1.40 – 1.45 Key Area for the GBPUSD Pair

When looking and interpreting the monthly chart, Brexit or the pandemic barely matter in the grand scheme of things. After all, as the chart shows, some other times the pair did travel more.

By the looks of it, the GBPUSD pair, also known as “cable,” has formed a triple bottom pattern on the monthly chart. The last leg lower, caused by the March 2020 drop during the pandemic, was followed by a strong bounce – a bounce that continues still.

As such, the 1.40-1.45 area becomes key to the pair in the medium and long term. The area is pivotal because it acted as strong support during the Great Financial Crisis and then as strong resistance on the first bounce after the Brexit referendum.

When it comes to support and resistance levels, the more the price has the power to retest it, the weaker the support or resistance becomes. Therefore, on a new attempt at the area, the GBPUSD pair may complete the triple bottom, and the focus will shift to the reversal pattern’s measured move.

The measured move, calculated by measuring the distance from the triple bottom to the resistance area, is projected from the breakout point. It shows 1.65 as target, and that would be on traders’ minds should the pair clear 1.45.

Starting with January 2021, the U.K. is on its own. A new chapter began, and no one knows if Brexit will be an economic success story or not. At a first glance, the U.K. seems to have more to lose from the “divorce”. At the same time, the new status looks interesting for worldwide investors willing to bet on the survival of one of the most developed economies in the world.

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