On Thursday night, as results for Brexit Referendum vote started coming in and “LEAVE” camp started gaining lead over “REMAIN” camp, GBPUSD started dropping and it was already trading below 2/29/2016 low even before the final result was out. In this video, we explain what caused GBPUSD to drop from just above 1.50 handle to it’s lowest level since 1985.
Heading into the Brexit Referendum vote, GBPUSD was showing an incomplete bearish Elliott wave sequence from 2015 and 2014 peaks and was approaching an inflection area up from 2/29/2016 low, it’s an area that we also call a no-enemy area as in this area both buyers and sellers agree in direction of the next move. In our experience, about 80-85% of the times, this area would produce a reaction in 3 waves at least which we use to get into a risk free position and then let the market do it’s thing. Reality is that if final result was in favor of “REMAIN”, GBPUSD could have rallied again but another undeniable fact is that by then, we had already seen enough of a drop from 1.4946 – 1.5300 area to eliminate risk on short positions. If GBPUSD rallied again, worst case would have been a break-even.
Watch the video below to understand more about this concept and if you like the video and would like to be able to trade the no-enemy areas yourself, we invite you to sign up for a no obligation Free 14 day Trial of our services.