The British pound has turned around to show signs of strength during the trading session on Wednesday, as we have broken above the top of the hammer from the Tuesday session. By clearing the ¥150 level, the market shows that it is trying to save itself, and at this point in time it is probably due for some type of bounce. Because of this, I believe that we are probably looking at a scenario where the market participants will continue to trade back and forth and try to reach towards the top of the massive selloff candlestick from the Monday session. If we can clear that, then it gives the market the air of strength.
GBP/JPY Video 22.07.21
On the other hand, if we were to turn around a break down below the hammer from the Tuesday session, that would be a very negative turn of events and could see this market dropping rather precipitously. At that point, I would anticipate that we would probably go looking towards the ¥145 level at the very least, perhaps even lower than that. This would obviously be a big “risk off” type of trade, so it will be worth paying close attention to. Ultimately, this is a market that I think will find one way or another to go higher in the short term, at least until we run into a bit of that sticky selling pressure. Breaking above the ¥152.50 level has the market trying to recapture the ¥155 level above. This has been a rather rough shakeout, but at the end of the day this is a market that certainly looks as if it is trying to save itself.
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