The British pound pulled back initially during the day on Friday, but then turned enough momentum to the upside to show signs of life again. When I look at this candlestick, not only do I see hammer but I also see the potential of a bullish flag. The bullish flag of course is very common for technical analysis practitioners, so therefore a lot of people will be paying attention to this. I think if we can break above the top of the bullish flag, we could go much higher. And to be honest it makes a lot of sense that we would see it here. After all, there are a lot of headlines out there about the Brexit, and the closer we get to some type of compromise, the more likely we are to see the British pound rally.
GBP/JPY Video 18.02.19
On pullbacks, I’m looking for short-term buying opportunities and I think that the ¥140 level is of course a massive support level based upon previous clustering, and of course the reversal of the yen “flash crash” that we had seen previously. With that in mind, I think that buying dips continues to work and that eventually we will break towards the upside. That upside of course will have a lot to deal with as far as headline risk is concerned, and of course the 200 day EMA which kicked the market back down. However, “V-shaped recoveries” tend to be very strong signals to say the least.
Please let us know what you think in the comments below