British pound rallies against the Japanese yen on FridaySterling broke out to the upside during the session on Friday, reaching towards the ¥140.50 level, an area that has been short-term support and resistance in the past. I believe that this market is trying to break out to the upside, but I also recognize that there is a lot of noise underneath.
The British pound rallied a bit during the trading session on Friday, reaching towards the ¥148.50 level, and then pulling back slightly only to turn around and challenge that level again. I think that the market could go looking towards the ¥149 level, and then eventually the vital ¥150 level. When I look at this market, I cannot help but notice the correlation with the GBP/USD pair which seems to be finding support based upon a longer-term uptrend line and of course we are forming a hammer on the weekly chart. I think that if we can break above the ¥150 level, the market is ready to go much higher. Until then, I would anticipate a lot of volatility, but it should be noted that we have formed a “higher low”, which of course is a bullish sign and suggests that perhaps the buyers are starting to take over again.
I believe that this market will probably react more to the total risk appetite of traders in general, so pay attention to stock markets which look like they are starting to perk up a bit. That suggests that perhaps the Japanese yen could selloff, and therefore we could see this market go higher. Otherwise, I think there is an uptrend line underneath that we could test, closer to the 146.50 region or so. I believe that the volatility continues, but currently it looks as if the buyers are starting to when the battle a bit.