The British pound has gone back and forth during the course of the trading week, as we have seen quite a bit of confusion. That being said, it is worth noting that this pair is highly sensitive to risk appetite, and therefore we have to pay attention to other markets in general. The Japanese yen is of course considered to be a safety currency, so it is worth paying close attention to. The market falling from here could open up a move down towards the ¥150 level, which extends down to the ¥149 level. All of that is an area that I think that if we break down below, it could open up a flood of selling.
GBP/JPY Video 20.09.21
On the other hand, if we were to break above the top of the candlestick for the week, it is possible that we could go looking towards the ¥155 level above, which is an extreme high that we had recently pulled back from. That being said, you can make a serious argument for a potential head and shoulders pattern forming over the last several months, so it is possible that we could be starting to see cracks in the surface and a potential selloff. Nonetheless, you need to be very cautious about the position size going forward, and only add as it works out in your favor. As far as jumping in with both feet, I would be very cautious about doing so. I think that we will continue to see a lot of choppy behavior, so it is worth noting that we are still at risk overall.
For a look at all of today’s economic events, check out our economic calendar.