British pound show signs of life against Japanese yen

The British pound rallied initially during the trading session on Tuesday, reaching towards the ¥147 level before pulling back a bit. As you can see, I have the 50 exponential moving average on the hourly chart and it shows signs of dynamic support. There are couple of different reasons why think this market will continue to go higher, not the least of which is that the British pound has been recovering a bit anyway. The USD/JPY pair has also rallied, which of course is a very positive sign for this pair as well, because it shows that the Japanese yen is starting to lose value.

I believe that the ¥145 level underneath will be massive support, and I think that will continue to hold for the near-term. I think that the market will continue to be very noisy, and of course it will have the usual correlations to overall risk appetite, so pay attention to the stock markets and how they react. I think if the stock markets continue to go higher, that should continue to drive this pair higher as well as it typically does correlate very well. Shorting this market isn’t much in the forefront of I thought process currently, but if we break down below the ¥145 level, I think it might be time to start selling this market and I think at this point I would wait until then to consider putting money to work.