The British pound has gone back and forth during the trading session on Friday, showing signs of support at the vital ¥142.50 level. This is an area that will continue to attract a lot of attention as we have seen buying and selling at this level more than once. Looking at the chart, you can see that there is a formed a nice-looking hammer, and that of course can bring and buying pressure as well.
One thing that is interesting about this is that even though the trade situation seems to be deteriorating before our very eyes, this usually wrist sensitive pair seems to be doing okay. That tells you that there is underlying demand in this area. If we can break above the highs from both Thursday and Friday, that could send this market looking towards the ¥145 level above. However, if we were to break down below the hammer from the Thursday session it probably opens up a move down to the ¥142 level and then possibly the ¥140 level.
Looking at the chart, I think there are plenty of reasons to be optimistic, but with China almost certainly looking to levy tariffs against the United States over the weekend and retaliation, thing I think you can count on is a lot of volatility. Simply put, the last 48 hour should be thought of as a range that we will eventually break out of, and that should give us an idea as to where we can go next. This pair holding up on its own though has been rather impressive and it’s something that should be noted as being optimistic.
Watch the Monday open, that will probably be crucial and decide the next couple of handles going forward as the market will have more information by then.