E Pound Sterling’s Prospects – Seeing Through The Brexit Fog

Historically, Britain has long been affected by literal mists and fogs which became much more severe after the onset of the Industrial Revolution in the late 1700s, as factories belched gases and huge numbers of particles into the atmosphere. To combat these, series of laws were brought in including the Clean Air Acts of 1956 and 1968. These acts banned emissions of black smoke and decreed residents of urban areas and operators of factories must convert to smokeless fuels.

If only it was that simple to deal with equally serious and far reaching financial fog which surfaces periodically. Britain’s exit from European Union Mechanism in 1992, the banking crises leading to run on banks and large scale bailing out by the government to name just 2 in recent times. 

Now we are faced with a fog called “Brexit”. Many politicians, experts and commentators are marshalling their well rehearsed arguments for and against causing utter confusion for the common folks. It is hard to evaluate all the relevant factors, many of which might have been forwarded by individuals or institutions with self-interest. So it qualifies as finical fog through which we must navigate. As “Technical Analysts and Traders” we could pay more attention to what the price is telling us about how the matters will look once the fog is lifted.

To do that we will take a look at series of price charts of GBPUSD over several decades and over the last few years observing what it reveals to arrive at possible conclusion that could enable us to plan our trade to benefit from this mess.

Chart 1 – Monthly charts from 1952.

The chart above is a monthly chart of price history dating back to 1952 from where it appears to have declined in 5 waves (numbered 1 -5) and which resembles declining megaphone called “Expanding Ending Diagonal” (EED) in Elliottewave terminology. I say ending as supposed to leading since powerful British Empire has been in long term decline and if it’s currency reflects that, then it could well be EED and the assumption will suffice for our analysis of the GBPUSD for the period that interest us.

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Disclosure: As always, please do your own due diligence and analysis for your requirement. 

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DanV 2 years ago Author's comment

Reposted the main chart on Tradingview for ease of tracking future price action, Chart Link - www.tradingview.com/.../C2He0lRg-POUND-STERLING-S-PROSPECTS-SEEING-THROUGH-THE-BREXIT-FOG/

Carl Schwartz 2 years ago Member's comment

Thanks for the link.

T J33A 2 years ago Member's comment

very interesting article. Thanks.

Paul McGee 2 years ago Member's comment

Insightful analysis, thanks.

Ersoy Toptas 2 years ago Member's comment

very good Analysis.. thank you

DanV 2 years ago Author's comment

You are welcome.

Kevin Richards 2 years ago Member's comment

Good read, thanks.

DanV 2 years ago Author's comment

Thank you for your appreciation.

Trading Signal Reviews 2 years ago Member's comment

Looks like the work of Anil mangal to me

DanV 2 years ago Author's comment

Thank you for your comment. I can assure you there is no connection of any kind to him or his appraoch.

Ersoy Toptas 2 years ago Member's comment

I've known the author, Dan V., for two years and he is a very good analyst. There are many ideas in his analysis tradingview website. Thank you again Dan V!