The British pound broke higher during the trading session on Thursday as we continue to reach towards higher levels. The ¥135 level is a major round figure that will attract a lot of attention, and we had broken significantly from this level last time we visited it. Beyond that, there is also the 38.2% Fibonacci retracement level that will cause quite a bit of interest for sellers as well. All things been equal though, we need to see a reversal candle to take advantage of. This is a market that expresses risk appetite quite cleanly, but we also have the influence of the Brexit situation which is always a series of moving pieces.
GBP/JPY Video 16.09.19
Looking at this chart, if we do pull back it should be rather easy to drop towards the 50 day EMA which is painted in red, and then possibly the ¥130 level after that which was previous resistance. Longer-term, we could be looking at the lows and beyond which is what Fibonacci trading would suggest.
The alternate scenario is that we break cleanly above the ¥135 level and then start looking towards the 200 day EMA. It is likely to coincide with the ¥137.50 level in that general vicinity. All things been equal though, we are still in a downtrend even though we have seen a massive bounce. The massive bounce can’t keep going higher in perpetuity, so some type of pullback does make sense as momentum is stretch to say the very least that this point. That being the case though, you don’t necessarily want to try to stand in front of a freight train. Look for a pullback from the ¥135 level in order to be a bit more comfortable.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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