the British pound recovered quite significantly during Wednesday’s trading session as we broke the 50-day EMA again and await the FOMC. Honestly, this is a high risk situation that will most likely cause a lot of pain for traders as we don’t know exactly where we are going due to our risk appetite. The Federal Reserve will most likely have a major impact on what happens next and of course risk appetite in general. At this point we have a lot of short covers at this point so it makes perfect sense that we will see a small bounce.
I will short this pair at the first sign of exhaustion, especially if it is anywhere near the ¥155 level. This is an area that has received a lot of attention and as such I think this could be a good shorting opportunity if we get the right hawkishness from the Federal Reserve. That being said, if we break above 155 yen on a daily close, then it’s likely that we’ll see the market race towards the highs, perhaps based on the Federal Reserve “blinking” signs of trouble, which certainly the case would come.