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Christopher Lewis
GBP/USD daily chart, December 10, 2018

With the Brexit going on, or at least the conversation in Parliament about the Brexit going on, it is not surprising that the market is struggling to take off to the upside. I think that the 1.27 level is a major support though, but when you look at the last four or five days, you can see a clear pattern emerging: every time the market rallies, sellers will come back into push it lower. I believe that one of the only reasons this market is levitating above 1.27 is that people are afraid there might be a positive headlines coming out, which would cause the most amount of pain possible, sending the British pound much higher. The 200 day moving average is above the downtrend line, at least of the downtrend line involving this descending triangle.

GBP/USD Video 10.12.18

If we break down from here, the 1.22 level is where this move would measure two based upon the triangle. Beyond that, we also have the Federal Reserve suddenly softer, so that of course gives a little bit of support for the British pound, or at least less strength for the US dollar. I think you can count on a lot of confusion but I do think that the British pound needs to go lower overall. That being said, a break above the 200 day EMA would not only change the short term move, but possibly the longer-term move going forward and may turn this into a “buy-and-hold” scenario. If we break down, that will be a sudden move in my estimation.

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