- The British pound has rallied a bit during the early session on Tuesday as we continue to see a lot of noisy behavior.
- With that being said, I’ll be watching the top of the inverted hammer from the session on Monday, and if we can break above that then we could challenge the 50 Day EMA.
- At this point in time, then you would have a potential run toward the ¥198 level.
- The ¥198 level was previous support that we broke through rather viciously, so I would anticipate a bit of trouble in that area.
Technical Analysis
The technical analysis for this market is a bit dicey at the moment as the recent selling has put a lot of questions into whether or not the uptrend can continue. That being said, the 200 Day EMA currently sits at the ¥194.25 level, and should offer a certain amount of support. All things being equal, this is a market that I think if we can stay above the 200 Day EMA, then market participants will probably continue to look at this through the prism of trying to stay afloat.
However, if we break down below the 200 Day EMA, it’s likely that the British pound will continue much lower, perhaps down to the ¥187.50 level. On the other hand, if we recapture the 50 Day EMA to the upside, then I think we could even go as high as ¥200, but I recognize that it is swimming upstream as far as the recent action is concerned. Remember, this is a pair that is highly sensitive to risk appetite, so you need to be cautious as to what the rest of the world is doing when you trade this pair. After most of the indices are rallying, then it makes a certain amount of sense that the Japanese yen losing strength against the British pound and we rise. That being said, there’s a lot of fear out there at the moment, and it is causing a bit of a headache.
Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.