The British pound initially fell against the Japanese yen during the trading session on Friday but has found plenty of buyers to turn things around and form a bit of a hammer.
The British pound has pulled back a bit during the trading session on Friday but found enough support at the 50 day EMA to turn things around of form a bit of a hammer. The hammer of course is a very bullish sign, and therefore I think that this is simply a pause before we move towards the ¥145 level yet again. The market does look as if it is trying to find its footing longer-term, and I think that the British pound has finally started to attract a lot of attention, perhaps due to the possibility of a softer Brexit or even a delayed Brexit.
Keep in mind that this pair is highly sensitive to risk appetite, so let us keep an eye on global concerns such as the US/China trade issue, and of course global risk appetite such as stock markets. If we can get good news on both fronts, this market should have plenty of reasons to go higher. If we were to break above the 200 day EMA, this would be a very bullish sign and I think that we would eventually break out of the down trending channel that we had been in. Obviously, there is a lot that needs to happen in the meantime for this pair to truly take off, but the resiliency of this pair cannot be ignored, just as the British pound and it’s resiliency cannot be ignored. I would keep my position size rather small initially though, because so many different things can happen in this market.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.