The British pound rallies against the Japanese yen after initial fall this week

The British pound initially fell during the week, but then rallied significantly as we tested the bottom of the uptrend line that had previously formed. By doing so, it shows that we do in fact have a bit of resiliency left in this market, and I think if we can break above the weekly candle for this past week, the GBP/JPY pair will be free to go to the 155 handle. Ultimately, this is a market that is going to be very noisy and highly influenced by what’s going on between the United States and China. I think that the volatility of course will be a major issue, as headlines coming out of both of those countries could cause problems.

Breakdown below the weekly candle would be very negative, perhaps sending the market down to the 145 handle. That’s an area that should be supportive, but quite frankly if we rollover I would anticipate that this market should rollover rather hard and go much lower. The 155 level above makes a significant target and could lead to a nice little move. If we break above there, then the market is free to go to the 160 handle. I believe that this market is going to continue to be noisy in general, but if you can build up your position slowly, you might have a nice trade present itself.

Pay attention to the stock markets in general, because they do tend to drive this market as well. I believe that if indices around the world rally, that should push this market higher as well as money will fly from Japan and into other markets.