The British pound initially tried to rally during the trading session on Thursday but has turned around at the 151.50 level to show signs of exhaustion. The market has been very bullish of the last couple of days, so it does make a little bit of sense that we could see the markets run out of momentum. The ¥151.50 level has been previous support, so now it should end up being resistance on the return.
GBP/JPY Video 27.08.21
Looking at this chart, the ¥150 level continues to be an area of interest, as it is a large, round, psychologically significant figure and an area that we have seen a lot of noise. The hammer that formed a couple of months ago just below that level, it makes quite a bit of sense that we would see a big fight here. If we were to break down below that hammer, that opens up massive selling, perhaps reaching down towards the ¥145 level, followed by the ¥140 level. This is most certainly a market that is very sensitive to risk appetite, and if we were to make that move, it would be disastrous.
On the other hand, if we were to turn around a break well above the ¥151.50 level, that opens up the possibility of a move to the ¥152.50 level. Ultimately, this would be a “risk on” type of move and would probably have people looking towards other assets for opportunities to pick up gains as well. All things being equal, I think we are at a tipping point, and the next move could be rather big. However, we need to let the market make its decision first before trying to put a bunch of money to work.
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