The British pound has gone back and forth during the trading session on Wednesday, as we dance around the crucial ¥132 level. This is an area that previously had been significant support, so it should now be resistance, at least in theory. We did see that during the trading session on Tuesday, so the question is whether or not it can hold? At this point, it looks like it may be able to do to the fact that the range going into this is relatively short, but ultimately this is a market that is getting a bit extended, so if it is going to break back down, this is probably an excellent area to see that.
GBP/JPY Video 21.05.20
If we do break above here, then the question is whether or not we can break above the 50 day EMA? I think that could also cause a significant amount of resistance and therefore I like the idea of fading out there as well. I really do not have any interest in trying to buy this market, because quite frankly this is a set up that is a little bit “too perfect” for short sellers. Furthermore, the Japanese yen is a safety currency and we are most decidedly in a downtrend. Whether or not we break down is a completely different question, but I do know that there is only one direction that I would be trading this pair.
This article was originally posted on FX Empire