The British pound has rallied significantly during the trading session on Tuesday, reaching towards the ¥133 level, and perhaps more importantly from a technical analysis standpoint, the 50 day EMA. Because of this, the market looks to be a bit overdone, so I think it is only a matter of time before we rollover. The ¥132 level underneath is a major barrier, so if we were to break back down below that level, it is likely that we go much further to the downside.
GBP/JPY Video 27.05.20
On the other, if we were to break above the 50 day EMA, then it is likely that the market goes looking towards the ¥135 level the strength of the candlestick going into the New York session is rather bullish. That being said though, there is a lot of noise in this general vicinity right as I record this video, so I would fully anticipate some type of pullback.
Keep in mind that this pair will quite often break down as the Japanese yen is considered to be a safety currency if we get some type of negative headline. Quite frankly, there are plenty of potential negative headlines out there that we can see the market react to, so at this point I would be a bit cautious about going long, but if we broke above the ¥135 level, then we could see a longer-term “buy-and-hold” type of process. I think at this point it seems to be very unlikely that everything turns around that quickly and we simply shoot straight to the moon.
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This article was originally posted on FX Empire
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