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Reversing Brexit Sentiment

The conventional wisdom when the British voted to leave the European Union was that the UK economy would suffer much more than the continent. Naturally, this saw the EUR make strong gains against GBP. Despite a lack of clarity around the exit mechanism, EUR/GBP is showing signs that those initial fears could be overblown.

Frankly, there’s little change in the UK’s situation since the Prime Minister resigned and Theresa  May was sworn in. How and when the UK will separate from the EU is not clear.  However, the charts are pointing to an easing of concerns about the impact on the UK – or possibly gathering worries about the effect on Europe.

CMC’s pattern recognition scanner identifies a double top on the daily chart. The uptrend line is breached, and the MACD is showing increasing negative momentum, as well as an approach to the zero line. Tick. Tick. Tick.

Selling at current levels, a stop loss is easily placed above the trend line, at say 0.8495. There is possible support between 0.8200 and 0.8250, but a breach at that level may mean an eventual return to a swing target a5t 0.7650.

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