The British pound has drifted a bit lower during the trading session on Tuesday, reaching down to the ¥148.50 level underneath, and that is an area that has previously been resistive. I think that we continue to consolidate overall, as we try to build up the necessary momentum to break above the ¥149 level. If we do clear that level on a daily close, then I think the market probably comes looking for the ¥150 level. That’s an area that of course has a lot of psychological importance attached to it, as well as structural importance. Eventually, I do think that we could break above the 150 and level, and that would send this market much higher, perhaps reaching towards the ¥155 level. The market has recently tested a major uptrend line underneath, and I think the “floor” in the market is probably closer to the 147.50 level. A move below there could send this market even lower, perhaps down to the ¥145 level.
Remember that this pair is highly sensitive to risk, so pay attention the stock markets and commodity markets around the world. If they show signs of strength, that typically is good for this pair, because it’s negative for the Japanese yen. Part of the selling during the day would have been US dollar strength, as we saw the British pound get hammered. However, in this pair you can see it was a slight drift lower, so there are no signs of panic, which typically is good for this pair longer-term. Expect volatility, but I still remain constructive.
GBP/JPY Video 16.05.18
This article was originally posted on FX Empire
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