GBP/JPY Price Forecast – British Pound Pulls Back From Sky High Levels

The British pound has pulled back against the Japanese yen during the Monday session as perhaps we have gotten far too ahead of ourselves. That being said, it does make a certain amount of sense that we see this pullback towards the ¥155 level, but whether or not we can reach all the way down there might be a different question. All things being equal, this is a market that I think will find plenty of buyers on dips, but if we were to give back that ¥155 level, it could change some things. At that point, I think you may see a return to what we had just a few months ago.

GBP/JPY Video 11.01.22

The big question now is whether or not this market can continue to break out, or are we simply in a major consolidation area? I think at this point in time it is probably still a bit early to suggest one or the other, but clearly you cannot be shorted this market anytime soon. Keep in mind that the pair does have a high correlation to risk appetite, so we need to keep in mind that you probably need to pay attention to multiple other markets at the same time.

The ¥158.50 level above seems to be the absolute ceiling in the market, but if we were to break above there then it would obviously become even more parabolic, something that I would not like to see simply due to the fact that the higher a market gets in a short amount of time, the more violent the pullback tends to be.

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