The British pound has rallied quite nicely against the Japanese yen during trading on Tuesday, as the ¥141 level has offered support. This was the top of the previous bullish flag, and it now looks as if the market is trying to recover completely, as the British pound has been oversold due to comments coming out of Boris Johnson suggesting that he was not willing to accept some of the EU regulations that negotiations have produced so far. That being said though, they have 11 months to worry about this so it’s just part of the negotiation process from what I can see. At this point, the market is likely to continue to rally based upon the fact that reality will eventually set in.
GBP/JPY Video 05.02.20
If the 50 day EMA being broken above is a good sign, and it could open up the door towards the ¥148 level. That is where the market pull back from previously, so it would be a simple continuation of the overall uptrend that we have been in. Keep in mind that this pair is highly sensitive to risk appetite, which of course is very noisy at the moment. That being said, it certainly looks as if we are trying to make a stand here, and if the market wiped out the Monday candlestick, that would be an extraordinarily bullish sign. Support should run all the way down to the ¥139 level underneath, so it’s not until we break down below there that I would be a seller.
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