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Christopher Lewis
GBP/JPY daily chart, February 12, 2016

The British pound rallied a bit during the trading session on Monday but gave back some of those gains early as well. We are hovering around the 50 day EMA, which of course is a moving average that a lot of traders will follow. Somewhere near the ¥142 level there is a significant amount of support, so it’s not overly surprising that we are basically hanging about at this point. I do think that eventually we can break out to the upside, and a break above the Thursday hammer is a very bullish sign in will more than likely have this market looking towards the 200 day EMA. That, pictured in black on the chart, is of course a major moving average that a lot of people will be paying attention to.

It makes sense that this market is somewhat random and choppy at the moment, because we have so much in the way of noise geopolitically. We have both the Brexit and the US/China trade relations going on that will have a direct effect on these pairs. Because of this, I would not be surprised at all to see the next couple of days basically choppy and going nowhere in the short term, but I believe that longer-term we are going to see the British pound break out to the upside, based upon the fact that we are forming, or at least trying to, form a bullish flag on several GBP related pairs.

Please let us know what you think in the comments below

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