GBP Hovers Precariously Above 30-Year Critical Support
Candy Matheson | Jun 20, 2016 12:03AM ET
In advance of Britain's "Brexit" or "Bremain" vote on Thursday, June 23, the British pound has gained momentum as of last week, and Sunday night/Monday morning as I write this post.
The current price of the GBP/USD Forex pair is 1.4581, as shown on the Monthly chart below. It will need to break and stay above that level and, potentially retest 1.50, which represents the next long-term resistance level.
A break and hold below the 30-year major support level of 1.40 could have catastrophic repercussions, not only for Britain's FTSE 100 Index, but also other major world indices. Price retested this long-term critical support level last week and is rallying.
Notwithstanding the lower swing low made on the RSI in February of this year, the Momentum indicator has put in a positive divergence, hinting of impending strength in the pound sterling. Should price continue to rally and retest 1.50, I'd watch to see if the monthly RSI downtrend is broken to the upside, along with a higher swing high on Momentum. If so, we could see a strong continuation rally on the pound to, potentially, 1.60, or higher.
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