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British Pound vs Japanese Yen Technical Analysis
The British pound initially tried to rally during the trading session on Friday, but then fell apart as the area above the 50-Day EMA continues to offer a bit of noise. Ultimately, this looks like a market that is going to continue to see a lot of concern from geopolitical issues and of course interest rates rising around the world. Furthermore, the British pound itself was beaten down rather hard during the course of the trading day, as the Bank of England suggested that perhaps they weren’t ready to do anything to help the economy.
If that’s going to be the case, then it’s likely that the British economy will start to falter, and that will have a major influence on where we go next. The size of the candlestick is rather negative, and it now looks as if the market could go racing toward the ¥180 level. The ¥180 level is an area that continues to be important, as it was a major support level in the past, and an area that is also a large, round, psychologically significant figure. Underneath there, we have a significant amount of support as well.
When I look at the chart, it’s apparent to me that we are going to be very noisy, and therefore it’s likely that you need to be cautious with your position sizing as per usual. Furthermore, there’s a lot of uncertainty out there in general, so it’s probably small positions that could save your account. True, you could be lucky and therefore start to see winners occasionally, but those winners could get smacked back around rather quickly. At this point, it’s probably smart to trade slowly, and then just simply add as the trade works out in your favor. I think that we are in a very dangerous market right now, and therefore you need to be very cautious about how you spread your risk around. This is a pair that reaches the Japanese yen which of course is very weak, but the reality is that the British pound looks absolutely toxic at the moment. In other words, if you wish to short the yen, you might want to buy the dollar.
For a look at all of today’s economic events, check out our economic calendar.
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