The British pound initially fell during the trading session on Tuesday, reaching down towards the 50 day EMA underneath. The market then showed quite a bit of strength, as we turned around and reached towards the ¥143.25 level again. If we can break out above the highs of the last couple of days, it’s very likely that the market then goes looking towards the ¥145 level.
GBP/JPY Video 19.02.20
If we can break above that level, then I think it’s likely that the market is going to go to the ¥147 level, possibly even the ¥148 level. I like the idea of buying pullbacks given enough time, due to the fact that it offers a bit of value. The Japanese economy continues to struggle, and it’s likely that the market may witness the Japanese going into a bit of a recession, although possibly more of the technical variety than anything else as part of the loss will be temporary due to coronavirus fears.
To the downside, the ¥140 level is significant support, essentially the “floor” in the market. Ultimately, the market will eventually find plenty of reasons to go, and if the risk appetite starts to pick up again, that will also help this pair. Ultimately, the market has been rallying for a while, and I think at this point we are trying to form some type of base in order to continue the strength towards the highs again. I have no interest in shorting this market anytime soon.