As the British Prime Minister Boris Johnson was handed a defeat in court, allowing the UK parliament to get back to work, the British pound got a bit of a pop higher during intraday trading on Tuesday. Having said that, the market has given back quite a bit of those gains, and a sign of real weakness when it comes to the British pound longer term.
The British pound has rallied quite significantly against the Japanese yen for some time, but when you look at the longer-term trend it is but a blip on the radar. The 50 day EMA is underneath, but more importantly the ¥135 and the 38.2% Fibonacci retracement level has held. Beyond that, the 200 day EMA is above at the 50% Fibonacci retracement level, so quite frankly the “chips are stacked against” the pound.
The Japanese yen is of course a safety currency so it makes quite a bit of sense that buyer stepped in to pick up the Japanese yen as we have a lot of geopolitical concerns and of course the trade war continues to rage on. While there are a lot of geopolitical concerns out there, most traders will jump into the Japanese yen and the fact that the Brexit is such a mess only adds more fuel to the fire on the downside in this pair. It’s very likely that this market is beginning a pull back to at least the 50 day EMA, perhaps even the ¥130 level underneath, and then beyond. As far as buying is concerned, it’s all but impossible until we can break above the 200 day EMA on a daily close to do so and what has been a very reliable downtrend in the pair until the last two weeks or so.
The British pound has rallied quite significantly against the Japanese yen for some time, but when you look at the longer-term trend it is but a blip on the radar. The 50 day EMA is underneath, but more importantly the ¥135 and the 38.2% Fibonacci retracement level has held. Beyond that, the 200 day EMA is above at the 50% Fibonacci retracement level, so quite frankly the “chips are stacked against” the pound.
The Japanese yen is of course a safety currency so it makes quite a bit of sense that buyer stepped in to pick up the Japanese yen as we have a lot of geopolitical concerns and of course the trade war continues to rage on. While there are a lot of geopolitical concerns out there, most traders will jump into the Japanese yen and the fact that the Brexit is such a mess only adds more fuel to the fire on the downside in this pair. It’s very likely that this market is beginning a pull back to at least the 50 day EMA, perhaps even the ¥130 level underneath, and then beyond. As far as buying is concerned, it’s all but impossible until we can break above the 200 day EMA on a daily close to do so and what has been a very reliable downtrend in the pair until the last two weeks or so.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.