- The British pound has been somewhat noisy against the Japanese yen over the last several sessions, including Friday which was “Good Friday.”
- This means that liquidity would have been then, so you cannot read too much into the Friday session, but I recognize that over the last 5 or 6 candlesticks, the market has been somewhat sideways, and I think at this point in time we have a very obvious resistance barrier in the form of the ¥190 level, so I will be watching that area very closely.
A Potential Break Higher?
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There is the potential for a break above the ¥190 level, and if we were to break above there, then the 50 Day EMA comes into the picture as a short-term resistance barrier, followed by the 200 Day EMA which is just above the ¥192 level. If we were to clear all of that, then the British pound should trade to the ¥195 level. Short-term pullbacks at this point in time should see buying opportunities on dips, with the ¥187.50 level offering a little bit of a short-term floor. Anything below there then opens up the possibility of a move to the ¥185 level, which of course is an area that has seen a lot of support recently.
Keep in mind that this GBP/JPY pair is very sensitive to the overall risk appetite of markets, as the Japanese yen is considered to be a “safety currency”, while the British pound is a little bit more mainstream for risk appetite. Furthermore, there is an interest rate swap that is positive at this point in time, so you do get paid to hang on to this pair, and I think it gives you a little bit of time to hang on to a trade-in wait to see a certain amount of momentum. A momentum trade of course would be nice, but you can hang out and get paid to hold British pound against the Japanese yen in the meantime while you’re waiting for price appreciation.
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