The British pound has rallied a bit during the course of the trading session on Wednesday to reach towards the ¥157.50 level rather early. That being said, there is a ton of resistance above so be interesting to see if we can break out. If we were to clear the ¥158.50 level, this thing will continue to go much higher, and it becomes more of a “buy-and-hold” type of market. With that being the case, I would be very cautious, and I certainly do not like the idea of buying all the way up here. Chasing the trade is a great way to lose a lot of money, so please keep that in the back of your head.
GBP/JPY Video 13.01.22
To the downside, the ¥156 level seems to be supportive, so you should pay close attention to that as well. All things being equal, this is a market that had gone a bit parabolic, so we need at the very least to work off some of the froth that had been in this market for quite some time. Underneath, we have the ¥155 level as support, and I think which will end up being a bit of a “bottom in the market” at this point in time.
If we were to break down below there, then it could break down significantly at that point and could even change the overall trend. After all, when you look at the past, we had a very bullish parabolic move just as we have had recently, only to break back down. At this point, I think this is a market that continues to see a lot of noisy behavior, but if it breaks out I will probably short the Japanese yen against something else like the Aussie dollar which has to play a bit of “catch-up.”
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