The British pound has rallied significantly during the trading session on Friday, reaching towards the crucial ¥139 level, an area that previously had been massive support. At this point, one would expect that to offer a bit of resistance due to the fact of “market memory” being such a major influence on markets. With that being the case, I would be cautious about buying it all the way up here, but a pullback towards the 200 day EMA might make for a nice opportunity. That being said, the market is highly likely to see a lot of noise and therefore it should be paid close attention to.
GBP/JPY Video 08.06.20
With this being said, the market has gone parabolic so even if it is overdone, you have to be cautious about shorting with any type of size. If we were to turn around a break down below the 200 day EMA, then that opens up the possibility towards the ¥135 level. With that being the case, the market looks highly likely to see a lot of support at that area as well, and at this point I think it makes more sense the pullback that you have to be cautious trying to fight this type of momentum.
The alternate scenario is that we slice right through the ¥140 level above, which would be more of a “blow off top” type of situation. I certainly would be overly cautious about taking advantage of that trade though because it would essentially be “chasing the trade” which is the greatest way to lose money.
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This article was originally posted on FX Empire
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