The British pound has initially tried to rally during the trading session on Friday but found the ¥132 level quite resilient as far as selling is concerned, and we have drifted lower from there. Ultimately, this is a market that I think will start looking towards the ¥130 level underneath, possibly even the ¥129 level. Because of this, the market is continuing to “sell the rallies”, which makes quite a bit of sense considering how many negative headlines there are out there just waiting to cause issues. After all, the Japanese yen is considered to be a “safety currency”, so this pair tends to continue falling if there is a lot of negativity out there. I do believe that is going to continue to be the case, so therefore I like the idea of fading short-term rallies every time we get an opportunity to.
GBP/JPY Video 25.05.20
If we can break down below the lows underneath, somewhere closer to the ¥129 level, it is likely that we could go to the ¥127.50 level, possibly even down to the ¥125 level. To the upside, if we were to see the 50 day EMA be tested, that should be a massive amount of resistance as well but obviously that would take a pretty significant move to the upside to make it happen. With that in mind, it is crucial that you keep your position size relatively small but look at rallies as opportunities to pick up the Japanese yen “on the cheap.”