The British pound has fallen against the Japanese yen only to find support again at the 140 young level. We are heading to a major crossroads, and I think the next couple of days could be rather volatile.
The British pound pulled back slightly during the trading session on Thursday, but then turned around of form a bit of a hammer. That hammer of course sitting at the ¥140 level is a very strong sign, and I think that if we can break above the 50 day EMA, pictured in red on the chart, then we could have a move towards the 200 day EMA. Keep in mind that this pair is highly sensitive to risk appetite so if we can get a move higher in the British pound overall, I think that this will be one of the most explosive moves. Beyond that, it will be highly sensitive to the stock markets which of course have been chugging along to the upside.
At this point, it also will focus on the US/China trade relations, which of course is a fluid situation. At this point, I think that the market is precariously and cautiously bullish. However, it wouldn’t take much to spook British pound traders, and that of course will send this market tumbling. I believe that the market will continue to be very difficult to handle, and whatever result we get in the British pound, it will be super charged in this pair. I see support below at the ¥138 level, and of course the previously mentioned resistance of the 50 day EMA. In the meantime, short-term traders are probably looking to buy the dips, for a quick “smash and grab” type of trades that will present themselves.
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.