The British pound has rallied a bit during the course of the week, recapturing some of the losses from the previous two. That being said, it is becoming very obvious that we are in an area that is significant support, and if we were to turn around a break down from here, it could end up being a very negative and ugly scenario. With this being the case, the market looks very likely to continue paying close attention to the area just below, and as a result I think we are either going to continue consolidating, or we are going to break down.
GBP/JPY Video 30.08.21
When you look at the daily chart, it does not take much imagination to suggest that we perhaps are forming some type of topping pattern, but on the weekly chart it looks a little more consolidated. Because of this, I do believe that it is going to continue to be a very difficult environment to trade, but we should get some type of clarity sooner or later, and once we break either down or above the high from a couple of weeks ago, then we can start to put a little bit more money to work.
Keep in mind that this pair is highly sensitive to risk appetite, so it will come down to sentiment more than anything else. The British pound is a bit “riskier” than the Japanese yen, which is considered to be a major safety currency, so therefore I think what we are seeing here is a scenario where it simply going to come down to how traders “feel” going forward. Pay close attention to other market such as stock indices and commodities to get an idea as to what the risk appetite is.
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