The British pound initially rally during the trading session on Monday but gave back the gains as the market has gotten far too ahead of itself, as it entered the previous consolidation area. So far, it looks as if the market is starting to respect that area again, and it makes quite a bit of sense considering that the British pound against the Japanese yen is very risk sensitive, so at this point in time it is likely that we will continue to see a lot of trouble in this market. Quite frankly, the breakdown from last week was something to pay attention to, and the reality is that the main thing that saved the market was the fact that the ¥130 level was city below, which of course will attract a lot of psychological attention.
GBP/JPY Video 12.05.20
On the other hand, if we break above the top of the shooting star for the candlestick that formed early in the New York session, then the market probably goes looking towards the 50 day EMA above. Looking for opportunities to fade any rallies will continue to be how I approach this market, unless of course something changes with the overall attitude of the global economy and of course global markets in general. A break down below the bottom of the daily candlestick for the Monday session will confirm quite a bit of the negativity as well and should send this market looking towards the ¥130 level again. If we can break down below there, then the market has much further to go to the downside, perhaps even ¥125 given enough time.
This article was originally posted on FX Empire
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