The British pound initially tried to rally during the trading session on Tuesday but ran into a significant amount of resistance in the form of the ¥132 level. The 50 day EMA is just above, offering a significant amount of resistance, and it could in fact offer essentially what could be thought of as a “ceiling” in the market for the short term. The ¥130 level underneath of course is going to be considered supportive from a psychological standpoint underneath, so at this point it’s difficult to imagine a scenario where traders will simply slice through it. However, with all of the Brexit noise, that could in fact happen.
GBP/JPY Video 09.10.19
Keep in mind that this is a market that is highly sensitive to risk, and there does seem to be plenty of it out there. Because of this, the pair is probably one that will be sold on short-term rallies, at least until we can break above the 50 day EMA. A break down below the ¥130 level has the market reaching towards the ¥127.50 level again and seems to be the most likely of longer-term moves. This doesn’t mean that we will get the occasional rally but you should look at that as “value” in the Japanese yen, especially against the British pound which has so many other external factors tied into it right now. If the market was to turn around and clear the ¥132.50 level, then we would have to rethink things.
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This article was originally posted on FX Empire
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