The British pound has rallied significantly during the week, more specifically after the election. We had spiked all the way to the ¥148 region, an area that of course was always going to cause resistance based upon previous action. Furthermore, it’s also the 100% Fibonacci retracement level so it makes sense that we did pull back a bit from there, especially considering how quickly it happened after the election results were released. To the downside, the ¥141 level should be supported and most certainly the ¥140 level will be.
GBP/JPY Video 16.12.19
I anticipate that this market will probably pull back, perhaps trying to find a bit of value as the market is a bit extended and exhausted. Pullbacks should be thought of as value though, and it’s likely that the market will continue to be looking for those pullbacks as an opportunity to get involved in what should be a strong move higher and on longer-term time frames. Ultimately, if we were to break above the ¥150 level that would be a crucial move as well, and a whole host of new money would come flooding into the marketplace. The ¥140 level below being broken to the downside would be very negative and send this market much lower. That being said though, it looks very unlikely as we have seen such a nice return over the longer term. With this being the case, it’s very possible that we get a bit of back and forth over the next several candles, and then eventually the breakout once the British actually leave the European Union.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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