The British pound has initially pulled back during the trading session on Friday but has seen buying come in and push the market towards the top of the short-term range again. At this point though, the market still sees a lot of noise in general, so I do think that we are likely to see choppy trading back and forth. The 50 day EMA is sitting just above, and therefore it should be paid attention to. If the market were to break above there, the likelihood of a move towards ¥135 increases drastically. On the other hand, if the market were to break down below the ¥132 level again, one would have to think that the overall trend would come back into play, suggesting that we are going to go lower.
GBP/JPY Video 01.06.20
Having said that, there seems to be a lot of hope out there that as economies around the world open up, there should be an opportunity to pick up profits in general and therefore it should be more “risk on” that it has been. Perhaps the idea is that we had oversold everything to do with risk appetite, and therefore it makes sense that this pair pops. Ultimately, the market is at a major decision area, and therefore we should see some type of bigger move coming, so next week will be crucial. The 50 day EMA of course is an area that should cause some kind of barrier, so breaking above there will attract a lot of momentum traders.
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This article was originally posted on FX Empire
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