The British pound rallied significantly during trading this past week, breaking above the top of a shooting star from the previous week. It now appears that the 50% Fibonacci retracement level and the ¥140 level both have held, and I think at this point we are getting ready to see some type of bounce. This isn’t to say that it’s going to be easy to take that bounce and hang on, but what it does mean is that longer-term traders will probably be willing to do so. Use small positions, because quite frankly this pair does get rather erratic, but at the end of the day I think we are likely to see continued up bullish pressure, and I think the ¥140 level is going to offer a bit of a “floor” in the market, barring some type of very negative headlines coming out.

That headline could come in the form of arising trade tensions between the United States and China, or it could come in the form of more uncertainty with Brexit. However, I think things have gotten so cheap in Great Britain that people are willing to take a chance on the British pound, especially against currencies beyond the greenback. I expect this pair will probably take off to the upside eventually, but we may have the occasional pullback to build up confidence over the next couple of weeks.

GBP/JPY  Video 27.08.18

This article was originally posted on FX Empire

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