Overview of GBP/USD on May 23. The forecast for the "Regression Channels". "Hard" Brexit or a second referendum?

4-hour timeframe

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Technical data:

The upper linear regression channel: direction – down.

The lower linear regression channel: direction – down.

The moving average (20; smoothed) – down.

CCI: -97.0078

In recent days, the UK has been covered with the news about the resignation of Theresa May, and voluntary, about her failure in negotiations with Labor, the rejection by the House of Commons of the "new" version of the "deal" with the EU from Theresa May. As you can guess, all this news was frankly negative for the pound sterling. It seems that Theresa May will not wait for the fourth vote, and the Parliament made it clear to her that it will not accept her version of the agreement on leaving the EU this time. From our point of view, Theresa May's resignation had to happen at the first or second vote of no confidence. In this case, the head of state would have been a new Prime Minister, who would have started work on this issue first. Now, the UK will have to participate in the elections to the European Parliament, while continuing to try by all means to leave the EU. The new Prime Minister is likely to be Boris Johnson, who is an ardent supporter of the "hard" Brexit. There is a reason to believe that this issue will be resolved with him much more quickly, although it may not be as pleasant for the UK as we would like. However, the whole country has already realized that it's impossible to quit the EU "in a soft way". Accordingly, either to cancel Brexit through the second referendum or "hard" scenario. Meanwhile, the pound continues its free fall. Bears continue to push the pair down, as there is no reason to buy the British currency. To characterize the technical picture of the pound/dollar pair does not even make sense, it is obvious and there is no alternative.

Nearest support levels:

S1 – 1.2634

S2 – 1.2573

Nearest resistance levels:

R1 – 1.2695

R2 – 1.2756

R3 – 1.2817

Trading recommendations:

The pair GBP/USD continues its non-stop downward movement. Thus, sales of the pound sterling with targets at 1.2634 and 1.2573 are still relevant, before the Heiken Ashi indicator turns up, indicating a new round of upward correction.

It is recommended to consider long positions after the consolidation of the pair above the moving average with the targets at 1.2878 and 1.2939. However, at the moment, the position of the bulls is extremely weak, and this option is not expected in the near future.

In addition to the technical picture should also take into account the fundamental data and the time of their release.

Explanation of illustrations:

The upper linear regression channel – the blue line of the unidirectional movement.

The lower linear regression channel – the purple line of the unidirectional movement.

CCI – the blue line in the indicator regression window.

The moving average (20; smoothed) is the blue line on the price chart.

Murray levels – multi-colored horizontal stripes.

Heiken Ashi is an indicator that colors bars in blue or purple.

The material has been provided by InstaForex Company - www.instaforex.com