Cable gaps down on open after Fridays crash and what would of usually been a a nice gap of 50 pips it looks non existent compared with the 700 pip candle on Friday.
The Gap was quickly filled and now looks to the downside once again. Price now range bound in a triangle Support at 1.23100 and 1.22244 and longer term support at 1.19. Resistance at 1.2477 and 1.2600. Price looks now further to the downside whilst it stay under trend line resistance (see chart).
Brexit has caused enormous pressure for UK and because we have not seen a full recovery of Fridays crash its looking more to the down side and there has been talk of the pound going to parity.
After a huge crash like Fridays “flash crash” historically and technically it just could be. If we take the Kiwi chart back in August 2015 the Kiwi was dumped 320 pips in 5 min. (an example there are many more ). Although, small in comparison to the pounds crash but for the kiwi having a much smaller daily range it was huge. This crash sparked the rally of NZD/USD up 1300 pips.
A big dump can also comprise of longs being taken up. Who ever dumped cable on Friday has also bought cable. Another possibility can comprise of the old fashion “if you scrub my back I’ll scrub yours”. What ever game the big banks are playing at, you can be sure they made money on the way down and will make it on the way up.
For every seller there is a buyer and every buyer there is a seller . Who ever bought the pound to offset the seller would of hedge the risk taken on board. This is why I have suspicion it was a well executed set up. Nevertheless Cable was seen to be in a massive down trend even though post brexit support was a good place to go long no one expected this sell off.
Despite comments from French President Hollande who said the UK must wear the consequences for leaving the EU this was only good for around a 50 pip drop.
The GBP/USD Aftermath is felt by many retail traders form poor risk management and dodgy brokers. Accounts have been clean up and dreams are gone. All the usual comments come out of the wood work on how much of a scam Forex is. Those that used correct money management and a good broker had no problem. With this I must stress.