The British pound has fallen hard during the day on Friday to break down through the 200 Day EMA, and then the ¥152.50 level, an area that has been important for some time. Ultimately, this is a “risk-on/risk-off” type of situation, as the Japanese yen is considered to be a safety pair. Ultimately, I think this is a market that will continue to see choppy and volatile behavior, and with this being the case it is likely that the markets will continue to see a lot of sudden moves, so you need to be cautious about the position size that you are taking.
GBP/JPY Video 07.03.22
If we do turn around and rally from here, I think it is only a matter of time before the sellers come back. With all of the geopolitical concerns and of course, the inflationary concerns continue to suggest that the markets are going to be very noisy. This candlestick is of course very ugly, and very telling. I do think that it is probably only a matter of time before this market goes looking towards the ¥150 level unless something changes with the overall risk appetite. All things being equal, I am looking for signs of exhaustion after short-term rallies to start selling again. The market needs to see a major change in order to see this market try to go to the major resistance at the ¥155 level.
The volatility in this pair will be outrageous because quite frankly it is a very volatile pair for the most part. The size of the candlestick does suggest that there will be some follow-through though, and it should not be a huge surprise to see that we have had more risk taken out of the market heading into the weekend because the headlines over the weekend could cause massive trouble.
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This article was originally posted on FX Empire
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