The British pound has initially tried to rally against the Japanese yen during the week, breaking above the 200 week EMA. At that point though, we found plenty of selling pressure, and now we have turned around to form a shooting star for the second week in a row. That of course is a negative sign, but I also think there is a massive amount of support underneath at the ¥140 level. In other words, I don’t think that were necessarily going to see some type of meltdown, but a pullback to find some type of value makes quite a bit of sense at this point in time.
GBP/JPY Video 27.01.20
The alternate scenario of course is that we break above the top of the duel shooting star candlesticks, and that could of course send this market much higher. In that sense, it’s almost set up as a bit of a binary trading opportunity. A breakout above the duel shooting stars is an extraordinarily rare signal to go long, because not only are you making another high, but you are breaking the back of a couple of pushes to the downside. Keep in mind that this market is highly sensitive to risk appetite in general, so pay attention to other things along the lines of stock markets and whether or not there are people out there willing to start buying again. So far, things look rather healthy, and it should also be noted that PMI figures in Great Britain were better than anticipated this week. However, the technical analysis favors a short-term pullback of a couple of handles.
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This article was originally posted on FX Empire
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