The British pound formed a bit of a bullish candlestick early in the day on Tuesday, as the market bounced from the ¥132 level. By doing so, it shows signs of life yet again, as the market has been stubbornly bullish. That being said though, it comes down to risk appetite in general as the pair is overly sensitive to that. At this point, if the market breaks down below the ¥132 level, it would be a wipeout of the Tuesday candlestick which of course would be extremely negative. At that point it could very well send this market down to the ¥130 level, perhaps even the ¥127.50 area.
GBP/JPY Video 13.05.20
To the upside, the 50 day EMA is sitting around the ¥134.50 level, and it is likely that the level will come into play if we do rally. Regardless, we are still very much in a downtrend, so I am looking for reason to sell this market. The question is whether or not we break down below this candlestick and continue the downtrend or do we try to rally a bit in order to find selling pressure above that we can take advantage of, not to mention exhaustion. That being said, it should be noted that if we break above the ¥136 level, that would be an extraordinarily bullish sign, but we are at the very minimum days away from something like that happening. This market should continue to attract sellers in general, and therefore I remain bearish on the whole.
This article was originally posted on FX Empire
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