The British pound has gone back and forth during the trading week, as we look very confused at the moment. It is worth noting that the previous week candle had reached all the way to the ¥140 level, only to pull back. Now we are sitting at the top of the body of the candle, as we continue to be a little bit stagnant. This makes sense, as we are moving on the latest Brexit headlines, due to the fact that we are getting close to the deadline. The question now is whether or not there is a deal? If there is not a deal this pair will probably fall apart rather rapidly. On the other hand, if there is a deal, and that seems to be the base case scenario, then it is likely that we go back towards the ¥140 level. Obviously, we have been pricing in that type of move for a while.
GBP/JPY Video 23.11.20
Looking at the chart, the ¥135 level is an obvious support level, as we have bounced from there several times. Quite frankly, I would be a bit surprised if we get down to that area but if we did I think it would be a nice opportunity to pick up value, and less of course we figure out there is a “no deal Brexit” coming, which means that the ¥135 level would probably be ignored and we would go much lower. The base case scenario at this point though is the buy short-term pullbacks, perhaps over the course of the day or two and aim for the ¥140 level yet again. After that, we have the ¥142.50 level which is where the 200 week EMA is and a massive shooting star from months ago.
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