The British pound has bounced just a bit during the trading session on Tuesday, as we continue to see a little bit of dynamic support at the 50 day EMA. At this point, the market is continuing to favor the British pound, as the Japanese yen is far too overexposed to the coronavirus issues in Asia. While this is typically a “risk on/risk off” type of currency pair, this is more about getting money away from Asia right now. Ultimately, this is a market that continues to chop around with an upward tilt. I believe that the ¥145 level continues offer resistance, just as the ¥141 level begins significant support that extends down to at least the ¥140 level.
GBP/JPY Video 26.02.20
Ultimately, it does look as if the market is trying to build up the momentum needed to reach towards the highs again, which is closer to the ¥148 level. If we can break above there, then it’s very likely that the market goes looking towards the ¥150 level. The market continues to be very noisy obviously, but ultimately it does look as if we are trying to rally in general. With that being the case, I do like the idea of buying short-term dips, but I also recognize that you will need to be very cautious with your stop losses or perhaps even more importantly your position size.
If we were to turn around a break down below the ¥139 level, then you could have a bigger move to the downside. I don’t expect that though, so therefore I do remain bullish but I also recognize that it looks like we are trying to build up some type of basing pattern, and that can take quite a while.