The British pound has rallied slightly against the Japanese yen, as we continue to try to build up a base for a continued move higher. This is despite the fact that many pundits out there expect the Bank of England to cut rates. That being said, this is a market that is highly sensitive to the risk appetite of markets in general, as the Japanese yen is considered to be a major “safety currency.” With that in mind I also look at the 50 day EMA as sitting underneath and offering support, as it rises to the upside.
GBP/JPY Video 15.01.20
You can also make an argument for a little bit of a bullish flag being formed, although I think that takes a bit of artistic freedom. With that being said, the one thing that does look to be true is that the 50 day EMA has offered significant support and you can also make an argument that the previous bullish flag is offering a bit of a floor. If that going to continue to be the case, then it’s likely that this market will go looking towards the ¥148 level. That doesn’t mean that we get there overnight, but it does mean that you should be looking at short-term pullbacks as buying opportunities. Quite frankly, it’s not until we break down below the bottom of the overall bullish flag underneath near the ¥139 level that I would be looking to short this market. Unless something drastic happens, I fully anticipate that buyers will continue to push this market to the upside. With this in mind, I am bullish, but I also will build a position slowly.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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