The British pound has gone back and forth during the trading session on Wednesday, as we continue to bounce around the ¥130 level. That’s an area that had previously been resistance, so the fact that we couldn’t break through there makes quite a bit of sense. If we did break above that level though, then I think the market probably goes looking towards the 132 young level where the 50 day EMA is starting to drive through there. That being said, there’s also the negative situation, which makes quite a bit of sense as we are in a downtrend.
GBP/JPY Video 22.08.19
Breaking below the hammer from the trading session on Tuesday would be a very negative sign as it would be the market crushing the recent attempt to bounce. We are at extraordinarily low levels though, so would not surprise me at all to see this market make that quick break to the upside. I would not look at that as a buying opportunity though, I would look at this as an opportunity to short at a higher level. After all, the Brexit is nowhere near being solved, and that of course is a major problem for the British pound and we are almost certainly going to see a “no deal Brexit” given enough time. I think there is at least one more “major flush lower” coming, and at the very least we will be testing the ¥125 level. Ultimately, this is a “fade the rallies” type of situation.
This article was originally posted on FX Empire
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