The British pound gapped lower to kick off the trading session on Monday as traders ran for cover. The United Kingdom has locked itself back down due to coronavirus mutations, and of course people freaked out right off the start of the day. The market reached all the way down towards the 200 day EMA before bouncing back. The candlestick is starting to look a bit like a hammer, and therefore I do believe that we will find value hunters jumping into this market.
GBP/JPY Video 22.12.20
Keep in mind that it is holiday trading so the liquidity of course is very thin so it will cause erratic movements like we have seen to kick off the Monday session. The ¥140 level above has been massive resistance, and therefore I think it continues to offer a bit of a target. I think at this point in time, if we were to turn around a breakthrough there it would be an extraordinarily bullish sign after what we have seen. Remember, they are still talking about Brexit, and that does continue to put a little bit of hope into the marketplace.
The British pound continues to see a lot of hope built into it as every time it sells off there seems to be a reason to go long. Remember, all it would take is good headlines coming out of the Brexit negotiations to send the British pound higher, and perhaps there is a bit of thinking that with the massive damage being done to the UK economy, they may be a little bit quicker to take a deal at this point. At this juncture, it is essentially anybody’s guess.
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