The British pound gapped higher to kick off the trading session on Friday as we got the election results. That being said, we then pulled back to fill the gap and then shot even higher. That being said, the market has given back quite a bit of the gains and I think at this point the hard work is still ahead of us.
GBP/JPY Video 16.12.19
At this point, the ¥144 level underneath is support, the bottom of the gap being an area that is obvious. If we were to break down below there, it’s likely that the ¥142 level would be very supportive as well. While it looks like we are going to pullback from here, the reality is that she can’t short this market. A lot of the time when we gap in this manner, the gap gets filled, the thin market conditions can’t hold up, and of course people who have missed the entire move will be looking to buy what we get down to earth again.
It is because of this that I believe sometime next week you will be able to start buying this pair again but right now we need to stabilize a bit. The pair obviously struggled to break above the 100% Fibonacci retracement level which should not be a huge surprise. In fact, we could drop as low as ¥140 but I anticipate that the buyers will be involved between here and there. I’m looking for some type of support of bounce to start going long again and have no interest in shorting. That being said, the market had rallied so much going into the election that it should not be a surprise that we couldn’t keep up the momentum for longer-term move.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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