The British pound broke down a bit during the trading session on Friday but turned around to show signs of life yet again. This is a major “risk on trade” and should continue to go much higher. At this point in time, the market is likely to go looking towards the ¥145 level, the next large, round, psychologically significant figure. It is also very likely to continue to find support down at the 141 young level, and perhaps even the ¥142 level after the breakout.
GBP/JPY Video 09.12.19
With the conservatives set to take over Parliament with more of a majority, this means that Boris Johnson will probably get his Brexit from the European Union relatively soon, and that is one thing that the market will be paying the most attention to as certainty is definitely needed in Great Britain. When you look at the overall situation, it looks as if we have not only broken out, but we have started a longer-term uptrend that will probably last for years. Remember that this pair is somewhat sensitive to risk appetite, and therefore as long as everybody’s in a good mood, this pair will rally anyway.
The ¥143 level seems to be offering a little bit of resistance, but I fully anticipate that this market will break above there based upon not only the momentum, but the fact that we have recently broken above the top of a massive bullish flag that measures for a move closer to the ¥150 level. This is probably one of my favorite trades for the next couple of months, and I have put on positions that I plan on hanging onto for a couple of years.
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This article was originally posted on FX Empire
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