So another BREXIT deal/no-deal dead-line has come and gone. The cross-border business trade situation heavily impacting the intra-business conditions within the UK remain unchanged or should we say in-limbo! Frustrating wait, regarding an independent Britain untied from the EU, as was once desired, since BREXIT referendum vote in June 2016, still remains. A recent BBC article Brexit deadline passes and still nothing is set in stone is one of the many persistent stories that depict the clear picture of locals and their businesses.
From a technical standpoint though, the British Pound is doing reasonably well versus the base currency US Dollar. October 2019 has been a green month for GBDUSD currency pair, with some steep rises. On the daily price chart, is an XABCD Butterfly pattern in the making? This remains to be monitored over the course of next few months. Refer to the 3-year view of GBPUSD Daily Chart here. If we start plotting the XABCD pattern, starting with 23rd June 2016 drop (BREXIT Referendum date) highs as point X, then take it to the multi-years' low on 6th October 2016 (Flash Crash caused possibly due to accidental "fat finger" transactions and some other possible reasons) lows as point A, further to recovering Sterling during January / April 2018 highs as point B, down through to recent July 2019 lows as point C, the next and the last leg CD seems to be a positive one! The question is will this leg build up as shown in the chart and will we see Pound reaching pre-BREXIT levels of 1.50 anytime soon.
A close look into GBPUSD daily price chart, for 2019 time-frame, shows some distinct low (demand) and high (supply) areas, as depicted by the rectangular boxes. These should be considered as immediate floor and cap margins. So we can see the Sterling heading towards 1.30/1.32 levels very soon. Given that, earlier this year in May 2019, GBPUSD FOREX pair saw an explosive drop from similar levels, we could expect major resistance once again should Pound reach these levels of 1.30 / 1.32 next. From here, the currency pair should likely choose a northward directional move (in-line with our last leg CD, of butterfly pattern formation discussed earlier in this article). However, should the resistance prove strong, and Pound chooses to drop instead, based on data / political developments of the nation, we could see GBPUSD falling to as low as 1.22 / 1.2150 levels again.
In a very shorter time-frame for hourly (4H, 2H) trading, lot of side-ways intra-day move is expected, while the overall trends should be aligned to the levels explained above.