Yahoo Finance British Pound Gives Up Early Gains in Fear-based Trade
The British pound has initially tried to rally during the trading session on Tuesday, but then broke down rather significantly. The ¥155 level underneath continues to be an area that people will pay attention to, as it is a large, round, psychologically significant figure and of course an area where we have seen a lot of noise in the past. At this point in time, the ¥155 level is essentially my “line in the sand”, as whether or not I want to be long or short of this market. Ultimately, this is a market that I think will continue to see a lot of noise, due to the fact that it is so highly driven by greed and fear.
GBP/JPY Video 19.01.22
If we do break down below the ¥155 level, it could be a repeat of the last time this market spiked and went parabolic, only to fall apart. At this point, I think we probably have the ability to break down rather rapidly if that does happen. On the other hand, if we turn around and bounce from the ¥155 level, then the market should go back towards the highs again as it would show resiliency and perhaps even build a bit of a bullish flag. Ultimately, you need to keep your position size relatively small in this type of environment, as the markets are very skittish and of course this could cause a major issue.
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This article was originally posted on FX Empire