This is an interesting chart because it is not behaving the way one would anticipate. What I mean by this is that while the stock markets have gone straight through the ceiling, this pair has run into a bit of trouble. Granted, so far, the candlestick is green, but the reality is that the 200 day EMA has caused enough resistance to turn things around, and form a less than desirable bullish candlestick. This looks like the market is likely to come down into the ¥135 level again.
GBP/JPY Video 17.06.20
The British pound of course is a riskier asset in relation to the Japanese yen, so the fact that it is given back the gains is not a good look. With this, I do think that we are going to continue to squeeze between the 50 day EMA and the 200 day EMA, and this could be a bit of a “heads up” as to where risk appetite might be going. However, if we were to break above the 200 day EMA, then the market could go looking towards the ¥139 level. However, the fact that we pulled back so rapidly from the 200 day EMA does suggest that move will be a bit difficult to happen.
With all this being said, the market is going to continue to be noisy, and the ¥135 level will continue to be more or less a magnet for price, so do not be surprised at all to see this market reached towards their if it gets a little too far away. I think there are a lot of concerns out there, so it is a bit difficult to think that this market simply takes off to the upside.
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This article was originally posted on FX Empire
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