The British pound has gone back and forth during the trading session on Friday, reaching down towards the 50 day EMA before bouncing again. By turning around to form a hammer, it shows signs that we are in fact still very bullish. If you look at the structure of the chart, it will make a certain amount of sense that we would see buyers in this region, not only due to the fact that it is a large, round, psychologically significant figure, but it is also an area that looks structurally sound as well.
GBP/JPY Video 19.04.21
If we were to break above the ¥151 level, then the market is likely to go looking towards the ¥153.50 level. The market has been very choppy, and I would hesitate about jumping “all in” when it comes to this pair, because we have seen a lot of noise of the last couple of weeks. This is not to say that we cannot break out, just that we have a lot of “false starts” recently, so I would let the market prove itself before putting money to work.
On the other hand, if we were to break down below the 50 day EMA it could open up a move down to the ¥147.50 level, possibly even the ¥145 level after that. This is a market that is most certainly in an uptrend, but it had gotten far ahead of itself like several of the other markets that assumed the global economy was simply going to reopen and shoot straight up in the air. We have seen a lot of positivity but were a bit overdone.
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This article was originally posted on FX Empire