After a particularly volatile Friday session, GBP/USD finished the week gaining a fraction against the U.S. Dollar despite firming significantly early in the week. Friday saw Sterling go into a tailspin decline after UK PM Theresa May announced having come to an impasse with the European Union regarding her Chequers Brexit deal.
Cable fell over two big figures on the news and caused the formation of a “Gravestone Doji” pattern on the GBP/USD weekly candlestick chart as shown below. Key support shows up at 1.2662, with resistance now seen at the doji pattern’s top of 1.3298.
This Gravestone Doji candlestick pattern is a bearish reversal indicator that has particular significance due to its appearance at the end of a sustained five-week uptrend that commenced near the lower 14-day Envelope shown on the chart below in red.
This pattern could well signal an important short-term reversal for GBP/USD. Sterling’s near term decline could accelerate further next week, as notable pressure builds on PM May to come up with a “Plan B” or possibly face additional resignations from members of her cabinet over the Brexit controversy.
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