The GBP/JPY initially tried to rally during the trading session to break above the ¥185 level, but we have seen a lot of selling pressure above that level over the last couple of days, so I think we are still in a situation where we are looking for some type of value, and I do think that this is a market that continues to go higher of the longer term. The ¥180 level is almost certainly going to be a support level, as we have seen it act as such over the last couple of weeks.
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On the other hand, the market breaking above the top of the shooting star from the Monday session opens the possibility of a move to the ¥187.50 level. This is an area that gives way to a move to the ¥190 level, but I think we go much higher than that, perhaps reaching all the way to the ¥200 level. Ultimately, I’m looking for an opportunity to pick up value, as the Bank of Japan continues to do everything it can to keep interest rates down. By doing so, they continue to buy bonds in the market, thereby printing more currency.
This Could End Up Being a Nice Buying Opportunity
- If we were to break down below the ¥175 level, then we would start arguing with the 50-day EMA, which is also going to be supported.
- I have no interest whatsoever in trying to get short of this market unless something changes from a fundamental standpoint, perhaps the Bank of Japan finally changing its tune.
- That doesn’t look very likely, so therefore I’m waiting to see whether or not we get an opportunity to take advantage of pullbacks on a bounce that offers “she British pounds.
In general, you should also keep in mind that this pair is highly sensitive to risk appetite, and that might be part of what happened during the trading session on Tuesday, as traders started to sell off certain assets, and yield started to drop, thereby bringing the interest rate differential between the Japanese yen and several currencies to smaller levels. While not directly thinking of the British pound, the fact that the USD/JPY pair pulled back probably had a bit of a significant effect on this market as well. Either way, this should end up being a nice buying opportunity.
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