The British pound has rallied a bit during the course of the trading session on Tuesday to break above the top of a couple of shooting stars. This is obviously a very bullish sign, but to say this market is overextended would certainly be reasonable. I think this market definitely needs to pull back, as the market is parabolic. Nonetheless, I think it is only a matter of time before the buyers would come back in and pick this market up.
GBP/JPY Video 24.02.21
To the downside, the ¥145 level should be massive support as it was previous resistance. That being the case, the market is likely to see a significant pullback only to see buyers jump back in to pick it back up. We could also see support at higher levels such as the ¥147 level. All things being equal, this is a market that I think is going to go looking towards the ¥150 level. The ¥150 level is an area where I would anticipate a lot of resistance based upon previous action, and of course the fact that it is a large, round, psychologically significant figure. Nonetheless, the market is overcooked side do not have any interest in trying to pick it up here.
The British pound has rallied quite significantly as the vaccinations rollout in that country, and of course this is a market that has reflected that. I think longer-term we probably even go above the ¥150 level, but we need to come back down to earth first. If we were to break down below the ¥144 level, then I might be a little bit more concerned, but until then this is a “buy on the dips” type of situation.
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