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I'm taking a look at the British pound against the Japanese yen. You can see that the Tuesday session was positive right off the bat. It looks like we are slamming into a bit of trouble near the 198.5 yen level or so that I do think extends all the way to the 200 yen level. It is worth noting that I still believe that the US dollar is the strongest currency out there overall.
The British pound is essentially second place, so this is a market that should continue to favor the upside, given enough time, but that 200 barrier is extraordinarily resistant. The question is, possibly is somebody interfering here? Bank of Japan, for example.
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They have been known to do this, so we'll have to wait and see, but it does look like we are giving back a little bit of those gains, and now I think it is probably a dip waiting to happen. The 50-day EMA finds itself near the 195 yen level and rising. I think that is a short-term floor in the market. As long as we can stay above there, I think we're probably still buying on the dip overall.
If we can get above the crucial 200 yen level, then it's likely that this market goes screaming toward the 207 yen level given enough time. I'm not a huge fan of throwing a ton of money into this until we break above the 200 yen level, but I do recognize you get paid at the end of every day and that generally will drive the yen related pairs as the carry trade comes and goes, but ultimately everybody loves it. If we were to turn around and break down below the 195 yen level, then we have to start thinking about the 200-day EMA as the next support level. Anything underneath there, then we're probably going to open up the trap door and fall towards the 190 yen level.
EURUSD Chart by TradingView
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