Thus, with the bottom of the W at 126.00 and the top breakout level at 130.50, that is a 4.50 difference so the upside target is 135-ish which happens to be where the gap down move that occurred directly after Brexit. This adds credence to the target.
The RSI and MACD line remain long and strong wanting to see higher highs in price after any pullback in this daily time frame. Ditto the stochastics but since they are in overbot territory so they are more agreeable to the pullback in pound during the coming days. The FXB weekly chart is positively diverged and agreeable to upside in sterling going forward.
The upper band is violated so the middle band, also the 20-day MA, is on the table at 128.30. The 50-day MA is 128.50. This confluence may create a magnet for price and set up a buy point for pound (blue dot). If the FXB then recovers, which would be expected, and breaks up through the 130.50 level, that would be a potential buy point. The FXB would then pop to 132-ish then retreat, if it follows a typical pattern for breakouts, and another buy point would be at 130.50-ish, then when the pound moves above that initial high at 132-ish that would be another buy point. Keystone has no position in sterling currently but will consider a long FXB play as the above analysis plays out.
The breakout pattern described can be adapted to any chart and breakout from patterns such as W's, channels, inverted H&S's (inverted head and shoulders) and C&H's (cup and handle). This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added at 7:27 AM EST: The ECB rate decision is imminent. The pound is at 1.3364.
Note Added Saturday, 9/10/16: The FXB chart is the pound ETF so its numbers are not the same as the pound (sterling) itself. Keep that in mind. FXB ends the week down -0.2% to 129.65. The pound is at 1.3275.