GBP/JPY Price Forecast – British Pound Continues to Ignore Gravity

The British pound has rallied again during the trading session on Thursday to break above the psychologically and structurally important ¥155 level. This move has run much further than I would have ever guessed, especially considering the time of year where we are in. Part of this may be due to the fact that the United Kingdom chose not to lock itself down, or it might just be liquidity having its say as well. Either way, this pair has been over the top as far as the volatility is concerned for the last couple of months, and at this point I do not know if that is going to change.

GBP/JPY Video 31.12.21

Keep in mind that “risk on” in this market means that we are going higher, as the Japanese yen is considered to be a safety currency. The pair is overextended regardless of how you look at it, but at this point in time it is obvious you cannot short the market. Having said that, you cannot necessarily chase it either. This is one of those situations where we need the market to stop this behavior and set up for a trade. Right now, I just do not see what is going to take, but once we get through the jobs number next week it could give us an idea as to where we go for a bigger move.

Underneath, the 50 day EMA sits at the ¥152.50 level, and is curling higher. Because of this, I think that is the current “floor the market”, assuming that we can even fall that far. Either way, this pair desperately needs to pull back before we can put any money to work.

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