The British pound finished last week by both respecting the 1.4450 support level and forming a bullish Gartley. The British pound also respected the 50-day SMA and fell under pressure after the latest polls showed a widening gap in favor of British leaving the European Union. Some analysts are also calling for 15-20% sterling weakness if Brexit happens. Expectations are growing for a vote to occur around this summer.
The GBP/USD 30-minute chart shows the bullish Gartley pattern after the Friday’s non-farm payroll release. Point D was confirmed with both 70.7% Fibonacci retracement of the X to A leg and the 161.8% Fibonacci expansion level of the B to C move. If the rebound continues we could see price find key resistance from the 1.4550 area. Further upside may be capped by last week high of 1.4666.
If we see a return of the longer-term bearish trend, major support will come from the 1.4250 level. Consecutive daily closes below that support level could open the door for an eventual test of the psychological 1.4000 handle.
The trade: Sell GBP/USD at 1.4550 with a stop loss at 1.4550 and a take profit at 1.4250. The Risk/Reward Ratio is 1:3