The British pound has shot straight up in the air again on Tuesday, in what is becoming an extraordinarily dangerous market. The only reason I say this is that the word parabolic is the first thing that I see when I look at this chart. That being said, I think the possibility of a major pull back it is very real. The ¥155 level at this point in time will more than likely end up acting as a floor in the market, so I would love to see that area be tested. However, there is nothing on this chart that remotely suggests that we are about to see that happen.
GBP/JPY Video 05.01.22
To the upside, the ¥158 level is an area that will cause some resistance based upon previous trading, but when you look back to the last time we reached this level, we went straight up in the air then as well. I am afraid that might be the same path that we are taking. It will be interesting to see how this plays out but clearly there is a fight on our hands and the fact that we went straight up in the air does not help the situation at all.
Keep in mind that this pair is highly sensitive to risk appetite in general, so that could come into the picture as well. Nonetheless, eventually gravity has to be recognized, so that is why I am sure a pullback is coming. You simply cannot chase this market all the way appear, because it is a recipe for disaster. That being said, there is nothing on this chart that suggests you should be shorting it either.
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