The British pound has rallied initially during the trading session on Friday but then turned around to form a little bit of a shooting star. Nonetheless, this is a market that is extraordinarily range bound right now, and I believe that as it is the most popular vacation week for bankers around the world, we will continue to see very tight range currency pairs, this one included. Beyond that, we also have the jobs number coming out on Friday which could be a major “risk on/risk off” type of event, and that obviously would influence this pair as the Japanese yen is considered to be the ultimate “safety currency.”
GBP/JPY Video 01.09.21
With that, if we were to break above the ¥151.50 level, we could make a move towards ¥152.50 area above, where we would see similar resistance appear. The question right now is whether or not we just formed a double bottom, or do we simply balanced in order to make another attempt to go lower? As things stand right now, it is a bit of a 50-50 shot, so you would have to imagine that an impulsive candlestick on a shorter time frame might be the clue as to which way we are going.
To the downside, the ¥150 level is obviously a psychologically important but one would think that another attempt to break down below it could be successful and go looking towards that ¥149 level that had been the bottom part of the “zone of support.” Breaking below that would send this market much lower and a trigger for a longer-term short position would be breaking below the hammer that formed on the daily chart in July. At that point, I would become aggressively short.
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