The British pound has fallen a bit during the trading session on Friday, using the ¥130 level as a major resistance. This is a large, round, psychologically significant figure that we will of course see quite a bit of noise that. That being said, the market is forming a bit of a rising wedge and let’s be honest here, the risk appetite around the world is tenuous at best. With that, it’s very likely that the market breaking below the uptrend line should send this market much lower, perhaps reaching down to the ¥126 level. The real tell when it comes to the market breaking down will be one we sliced through the Wednesday and Thursday candle is as they are hammers. That would be a capitulation of buying pressure, and it should send this market much lower.
GBP/JPY Video 02.09.19
If we do rally from here, the 50 day EMA is closer to the ¥132.50 level, and there is a cluster of noise in that area that should continue to find sellers. All things being equal, you should keep in mind that the risk appetite around the world is tenuous at best, so it does favor the Japanese yen. Beyond that, we also have the Brexit to worry about, so I think it’s only a matter of time before there is some type of negative headline that works against the British pound, which makes quite a bit of sense as the lack of clarity will continue to be like an anchor around the neck of Sterling.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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