The British pound has been very noisy as of late, obviously due to the Brexit and the never-ending headlines. With that being the case, it makes quite a bit of sense that we will continue to see a lot of confusion in this pair as it is so sensitive to risk appetite, and of course is going to be very sensitive to the Brexit itself.
GBP/JPY Video 16.10.19
Keep in mind that the Japanese yen is a major safety currency, so if there are concerns around the global financial system, then typically money will run towards it. Brexit certainly falls in that scenario, but there are also other concerns such as the US/China trade talks, and many other things like that. At this point in time the technicals probably are going to lead the way as the 200 day EMA is right in the middle of trading action, and therefore a lot of longer-term traders are going to be looking at this as both potential support and resistance. If we break above the candle stick on Friday, then I suspect that this pair is going to go screaming to the ¥140 level.
On the other hand, if we were to break down below the hammer from the session on Monday and of course take out the psychologically important ¥135 level, then it’s likely that this market breaks down towards the 50 day EMA which is currently trading at the ¥133 handle. All things being equal, if you are short-term trader then you need to be looking at range bound traits. If you are a longer-term trader then you need to see either Monday or Friday get broken.
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