The British pound has shown itself to be a little overextended against the Japanese yen during early trading on Monday, as the ¥139 level offers resistance yet again. That being said, this is a market that I think will eventually go looking towards the ¥140 level, and if we can clear that level continue to go much higher. I like buying dips, and quite frankly I would like to see a little bit bigger of a pullback in order to get involved. Nonetheless, if we break the ¥140 level to the upside it is likely that we go much further.
GBP/JPY Video 04.08.20
The 200 day EMA underneath has been cleared quite handily over the last couple of days, so I think it is only a matter of time before that would offer a longer-term support level, just as the ¥135 level has been previously. In fact, the 50 day EMA is sitting there at the ¥135 level, so I think that also offers a bit of psychological support as well. Ultimately, this pair desperately needs to take a break, and that might be what we are seeing right now.
Ultimately, I think that you will see a lot of volatility but given enough time I expect this market to go much higher. After all, we have seen a lot of bullish pressure in the British pound in general, so it is hard to imagine why that would change suddenly. In the meantime, I am simply observing what is going on and I recognize that we are in a massive move just waiting to happen.
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This article was originally posted on FX Empire
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