- The British pound has rallied significantly against the Japanese yen during trading on Wednesday, as the ¥190 level has been broken.
- Breaking above the ¥190 level allows for the market to go higher, but I also recognize that this is a situation where traders will have to be somewhat cautious as the risk profile for markets around the world is all over the place.
- As a general rule, this is a market that rallies when people are feeling like taking on more risk, and falls when people are much more cautious.
- As things stand right now, caution makes quite a bit of sense as the markets remained very erratic.
Technical Analysis
Obviously, breaking above the ¥190 level is a very bullish sign, and therefore it does open up the possibility that the British Pound continues to go much higher. The 50 Day EMA is sitting right around the ¥191 level, so that might be our first barrier. If we can clear that area, then the 200 Day EMA, just above the ¥192 level, is your next potential target.
After that, the British pound could go looking to the ¥195 level. This of course would be a major coup for the British pound bulls, and an area that should see a lot of resistance. If we can break above there, then it changes the entire outlook for this pair.
Top Regulated Brokers
That being said, rallying to the ¥195 level would not be as crazy as it sounds, because it would just be a return to the previous consolidation area that we had been in. After all, this was the ceiling previously for several months, so return to testing that makes quite a bit of sense.
If we were to break down from here, the ¥188 level is very important, and breaking below there could open up a move all the way down to the ¥185 level. While that doesn’t seem as likely, it is something that you need to keep in the back of your mind for potential targeting.
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