The British pound has dipped a bit during the early hours on Monday, reaching down below the ¥127 level before bouncing slightly during north American trading. That of course is a negative sign, as this is a wrist sensitive pair. Granted, we did bounce a bit from that round figure, but quite frankly I think that’s more or less a technical move than anything else. Obviously, nothing has changed as far as the idea of the Brexit being solved diplomatically, and therefore the British pound is still to be sold.
GBP/JPY Video 13.08.19
Beyond that, we will need to watch risk appetite around the world. If it continues to struggle, that will be yet another reason why the Japanese yen should benefit. If that’s going to be the case that makes this basically a “perfect storm” for this pair, as we could see a lot of the trading public out there looking for safety, and in this case by getting rid of the British pound and investing in Japan.
If we do rally from here, I believe that the ¥130 level is going to be massive resistance, an area where we have seen previous resistance, and of course now the 20 day EMA is starting to race towards. With this, I believe it’s only a matter of time before rallies are sold into, and I will be all over exhaustive looking candles, especially if it appears on the daily chart. However, I have no qualms trading a shorter time frames as well. I have no interest in buying.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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