The British pound initially fell against the Japanese yen during the week, reaching down towards the 145 handle, but found enough support there to turn around and form a hammer. The hammer is a very bullish sign, and it now looks as if the market is going to make a serious attempt to break above the 148.50 level. If we can clear that level, I don’t think there’s anything to stop this market for reaching towards the 150 handle. The British pound broke out against the US dollar, so that should continue to offer significant bullish pressure in this market, and I feel it’s only a matter of time before we continue to go to the upside.
Buying dips
I believe that buying dips will continue to be the best way to play this market going forward, and with that in mind I am bullish of the market but also recognize that we will have a significant amount of volatility. Once we break above the 150 handle, the market can then continue to go even further but it is of course going to have to “climb a wall of worry.” Alternately, if we break down below the 145 handle, that would be a very negative sign, and could send this market down towards the 140 handle. The market continues to be one that you will have to watch, but it obviously has been making “higher lows”, as we continue to slam into resistance just above.
This article was originally posted on FX Empire