The British pound initially rally during the trading session on Thursday but gave back gains to show a bit of hesitation. At this point, the market looks like it could drop towards the ¥155 level, an area that has been important more than once, so it will be interesting to see how this plays out. Ultimately, I think this is a market that will eventually find buyers, but if we get a significant break down below that ¥155 level, that could unleash quite a bit of selling pressure like we had seen the last time we rallied so significantly.
GBP/JPY Video 21.01.22
On the other hand, if we turn around and break above the top of the candlestick for the trading session on Thursday that would be a very bullish sign and could see a lot of buying pressure jump back into the trading session. All things being equal, it is possible that we see that, due to the fact that we have seen so much in the way of bullish pressure recently. Ultimately, I think this is a market that will come down to whether or not we have risk appetite.
Keep in mind that this pair is highly sensitive to the risk appetite of markets in general, as the Japanese yen is considered to be a safety currency, while the British pound is a little bit more bullish as far as risk is concerned. This pair is highly volatile, so you need to pay attention to that as well, so I would keep my position size relatively small until we get some of this volatility out of the markets.
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