Technical Analysis - three key markets affected by Thursday's EU referendum


With recent polls gathering pace for the remain campaign we have seen a violent shift in sentiment towards the pound, as risks abate with the UK potentially leaving the European union. This change in the polls has seen EUR/GBP fall by 0.90%, with a low trade of 0.7730 which coincides with the 61.8% retracement of the recent rally from May’s lows. Since last Thursdays swing highs of 0.7995 the Euro has fallen by 3.68% against the pound as polls are moving in favour of remaining in the EU. 


Moving forward should this downward momentum continue a cluster of support comes in around 0.7687/0.7696, however should firm support be found at the 61.8% retracement and we see a turn round short term resistance could be found at 0.7781/0.7800. Coming into the final days of the referendum sentiment will be on a knife's edge as the market looks towards the polls to gain clarity on the UKs membership of the EU.

FTSE (UK 100)

As the recent polls have moved in favour of the UK remaining within the EU risk assets across the board have undergone a relief rally with the FTSE bouncing 5.7% from its lows of 5893. This recent change in momentum has nearly erased the recent losses. Interestingly today’s highs 6232 coincide with the 61.8% retracement of the entire move lower from Aprils highs. Moreover, price has now returned to the top end of the range in which it is currently facing resistance as the bulls could start to run  out of steam. This recent fast turnaround highlights the fragile market sentiment towards riskier assets with the ongoing EU referendum and constant change in polls.



Should this bullish price activity continue resistance could be found at the recent down trend line at 6287, this equally coincides with the recent swing and closing highs. On the other hand should the bears regain control of this market support could be found at 6133 the middle of the range and 6075 the previous support zone.


As Brexit fears wane sterling has had a considerable move to the upside against the dollar bouncing from as low as 1.4013 and as high as 1.4657 in the space of 3 days. This fast move has been in the wake of the polls suggesting Britain would stay in the European union. Cable found its support in and around the 1.4050 level which was Aprils lows and the 76.4% retracement level of the entire rally from the February lows. An interesting development in the MACD may be under way as bullish cross over may occur which could suggest further upside. Should this materialise upside pressure may come in around the previous highs of 1.4710 and 1.4770. Albeit should profit taking occur and the bears step back into the market support may reside at 1.4400/1.4415. 


Coming into this EU vote, cable is going to be in focus as it could be a driver for broader risk sentiment as the markets focus is turned to the UK.  

Added market volatility means increased opportunity but also more risk. To reflect this, ETX Capital may be increasing margin rates on certain markets.

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