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British Pound vs Japanese Yen Weekly Technical Analysis
The British pound has had a very noisy trading week, rallying to break above the ¥185 level, but just as we have seen over the last couple of weeks, anything above the ¥185 region is an area that people are struggling to stay upon. The fact that we have formed 3 shooting stars in a row suggests to me that a pullback is probably very likely. The ¥180 level underneath is likely to continue to be a major floor for the market, and while it certainly looks like we could have a pullback, I don’t think that it is anything to worry about longer term.
On the other hand, if we were to break above the top of the 3 candlesticks, that would be an extraordinarily bullish sign. In that environment, one would have to think there would be massive short covering and possibly even a lot of “FOMO trading” to rise higher. The interest rate differential between the 2 economies remains very wide, and therefore I don’t have any interest in trying to short this market. That being said, it doesn’t mean that it goes straight up in the air the entire time. In fact, I think this is the situation where we are simply going to have to reload at lower levels.
It’s probably worth noting that the liquidity will pick up a bit next week, as traders come back from summer. Because of this, I would expect a lot of noisy behavior, and I think that the market will be very difficult to trade on longer-term charts in the next couple of weeks. That being said, we are still very much in an uptrend, and have to keep that in mind.
For a look at all of today’s economic events, check out our economic calendar.
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