- The British Pound has rallied quite nicely against the Japanese Yen during trading on Friday as the 198 Yen level has offered a significant amount of support. The 50-day EMA is offering a little bit of resistance at the 198.9 Yen level, but I do think it will get sliced through again given enough time. The 200 Yen level is an area that we had flirted with for a couple of weeks before pulling back.
- And when you look at the longer term chart, this is an area that's been very difficult multiple times going back multiple years. I do think it's a bit of a magnet for price though. And if we get more risk appetite out there that typically will favor this pair going higher regardless. If we break down below the lows of the Thursday candlestick, which is basically 197.5 yen, then it opens up a drop to the 200 day EMA, which is down at 196 yen. This would accompany a lot of concerns about the environment of financial markets, that type of thing.
Yen Giving Back Some Gains
The Japanese yen did give back some of the gains during the trading session though. So, it makes sense that we would see bullish pressure here as well as other pairs. The market found itself right back in the same consolidation area between the 198 yen level and the 200 yen level, which would not surprise me at all. I do expect choppiness, but I also recognize that you get paid to hold this pair to the long side. The British pound obviously has much more in the way of interest rates backing it than the Japanese yen, which basically there's almost no chance that we'll see higher rates out of Japan anytime soon, despite the fact that I've heard some rumblings here and there. With that, I remain bullish.
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Potential signal: I am a buyer here. I would have a stop loss at 197.9 level. I would aim for the 200 level.
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