The British pound has initially rallied against the Japanese yen on Monday to continue the consolidation that we have been in for some time. Having said that, we have not necessarily exploded to the upside, and by the time the Americans are stepping on board, the market looks a bit lackluster to say the least. We are waiting for the next catalyst for a bigger move, and right now we just do not have it. That being said, we will eventually take off in one direction or the other.
GBP/JPY Video 11.08.20
What I do find interesting about this chart is that we have gone sideways for several days in a row after going parabolic. This is normally good sign because it typically means the market is simply “killing time” before building up more upward pressure that could eventually break through the resistance that extends between the ¥139 level, and the ¥140 level above.
To the downside, I see a lot of support right around the ¥136 level not only due to structure, but also due to the 50 day EMA. With that being said, I like the idea of buying dips, or at least perhaps going sideways and trading a range bound system on lower time frames. Eventually, I do think that the market is likely to break out to the upside and therefore go looking towards the ¥145 level given enough time. The British pound continues to outperform a lot of other currencies, so this should not be much of a surprise at this point.
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This article was originally posted on FX Empire
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