The British pound has rallied a bit during the trading session on Thursday to break out and show signs of life again. Ultimately, the market should continue to see a lot of volatility but with the Federal Reserve stepping in and offering a massive amount of liquidity, it should be noted that there are a lot of good signs out there for risk appetite, as the Federal Reserve is willing to buy just about anything that isn’t nailed down to the floor. Remember, the reserve is essentially the world’s central bank, as a lot of other policies flow either directly from there or in other indirect ways. In other words, we have suddenly seen another reason to see yet another leg of “risk on” type of attitude.
GBP/JPY Video 10.04.20
Now that the market has broken above the ¥135 level, it’s very likely to go looking towards the ¥137 level above, which is where the gap is. Because of this, I believe that it’s only a matter of time before reset level, and I think it will take just a few good days to get there. To the downside, the ¥135 level should now offer support, based upon market memory. The 61.8% Fibonacci retracement level is right there at the 200 day EMA, so all of this kind of lines up perfectly in a technical analysis standpoint. With that in mind, I bullish until we fill that gap at the least. You can also make an argument for a bullish flag just being broken to the upside, which could lead to a move all the way to the 100% Fibonacci retracement level but that obviously would take a significant amount of time.
This article was originally posted on FX Empire
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