The British pound bounced after initially falling during the day on Wednesday, as the 150 level continues to act as an important level on the market. It is also the 50% Fibonacci retracement level of the recent rally higher, and therefore I think that the markets will continue to be attracted to this area, perhaps reaching towards the 152.50 level over the longer term. If we do pull back lower, I think that the next area of significant support will be near the 149.25 level, which is the 61.8% Fibonacci retracement level. Because of this, I believe that opening a small position will probably be the best way to go, and then adding every 50 pips or so to your position.
Eventually, if we can break above the 153 handle, and then becomes a “buy-and-hold” scenario, and then we should possibly go towards the 160 level over the longer term. Given enough time, the market should continue to be bullish but dangerous. Because of this, I believe that the market could be one to pay a lot of attention to, especially considering that the British pound is in the crosshairs of most traders during the talks to exit the European Union. Longer-term, I believe in the British pound, and it would make quite a bit of sense that we continue to go higher against the Japanese yen as it is a “safety currency.” If the British pound goes higher against the US dollar, you should see a bit of a “knock on effect” in this pair.
GBP/JPY Video 07.12.17
This article was originally posted on FX Empire