The Truth About the Brexit: It’s All in the Charts

Want to know the truth about the Brexit?

Look at the charts.

We didn't hear much about the GBPUSD since the Brexit decision… and then there was the pound's flash crash.

Now that the GBPUSD is really moving, we're seeing countless headlines about economic uncertainty and political instability and central banks gone wild.

But does all this explaining — after the fact — help us make money?

Nope…

The right question to ask is how could we have seen the pound's collapse coming?

And how could we capitalize on it?

If we are always waiting for news and the next story to drop, by definition, we will always get left behind… similar to a reporter that's last to the scene.

In most cases, the answer is right in front of you.

Just look at the charts.

People lie.

But charts tell the truth.

With the charts, you will see the story before it hits the front page.

The GBPUSD is a great example of this truth.

Post-Brexit, the GBPUSD was in a sideways range for several months.

Most people wrote it off, looking for other opportunities.

But the pound remained in a downtrend throughout the entire sideways move. This told us to be bearish overall.

To see that, look no further than the weekly chart below.

If any traders were fortunate enough to see the action prior to the breakdown, they probably would not have pulled the trigger.

Why? Because every other time it tested the lows, it rallied.

So why should this time be any different?

This is where your ability to ‘listen’ to what the chart is saying becomes so crucial.

Look at this daily chart. I have highlighted the three main pivot lows.

What happened prior to the breakdown was the key.

The first two pivots pushed up relatively easily.

When GBPUSD came down for the third time, it struggled multiple times to move up.

In other words, supply was increasing and demand was decreasing.

And for the first time, price was staying below the moving averages.

This told us GBPUSD was getting close to making a move.

And once it broke down, that was the time to act.

This was the story: fear overcoming greed.

Not a slowdown in the UK or negotiations with the EU.

Humans love stories. We always want to know why.

But does why matter as much as when… and how much?

I think not.

I'd love to hear your thoughts on this. Email me at kurt@t3live.com.