- It's been quite a wild day during the trading session on Tuesday, as we have been all over the place going back and forth in the British pound against the Japanese yen as the market tries to determine risk on or risk off.
- The 190 yen level of course is an area that a lot of people will be paying attention to, as it is a large round psychologically significant figure and an area that has been support more than once, so therefore you would have to assume there's a certain amount of market memory in this area as well. All of that being said, the fact that we initially rallied, then turned around and plunged, only to turn around and show signs of resiliency again, suggests to me that we are building up inertia for a bigger move.
What is the Bigger Move?
The question of course is going to be where does the market go from here? What is that bigger move going to look like? If we can break above the 190 yen level, then I become bullish, at least for the time being, and the market could go looking at the 50 day EMA right around the 192 yen level. On the other hand, if we break down below the lows of the last couple of days, basically 188 yen, we could go down to the 185 yen level as well.
This is a market that I think is going to be very sensitive to everything else that's going on around the world right now, which is basically chaos. So, I think you continue to see a lot of volatility, but what you need to see is some type of impulsive candlestick that you can follow. For example, a nice big positive candlestick that closes above 190 yen would do wonders for my confidence of the market recapturing the upside. Of course, I can say the same thing if we break down and get a significantly negative candlestick that breaks the 188 yen level. Short-term traders will probably look at this through a range-bound lens, but those of us who are a little bit more like swing traders it's a market that's building up inertia. You just want to follow whatever direction it breaks.
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