- The British pound has gone back and forth during the course of the trading session here on Monday as we continue to dance around the 190 yen level.
- The 190 yen level of course is a large round figure that a lot of people will pay attention to but it's not necessarily going to be the be all end all of the world here.
- Given enough time, I do think the technical traders out there will be paying more attention to the 200 day EMA than anything else.
If we can break above there, then I think that the British pound will really start to take off and we could see some upward momentum. Short-term pullback, see plenty of support near the 188 yen level, and then again down at the 183 yen level.
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Those are both short-term support levels, but they should be somewhat important. Keep in mind that a lot of this comes down to the carry trade and whether or not it still exists, so therefore you do need to pay attention to the Japanese yen-related pairs across the board. Risk appetite is a major feature of what drives this as well, so if risk appetite picks up a little bit, I expect this GBP/JPY pair to do the same.
It got absolutely hammered recently but a bit of a bounce makes a certain amount of sense. Now the question is, can we break back above the 200 day EMA? And if we can, then it's likely that we will continue to rally towards the 50 day EMA, perhaps even as high as the 200 yen level. I do think it's going to be noisy, but at the end of the day, you get paid to hang on to this pair, and that's something that has not changed despite the fact that everybody had a freak out. Ultimately, this is a market that I think will continue to be hard to keep hanging onto, if you are heavily levered. However, if you keep your position size reasonable, you should do okay.
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