In the quiet trading that we have seen in the heat of the summer, quite frankly there has not been much to get excited about. A perfect example of this is the GBP/JPY pair, which has simply done very little. If this very volatile market is quiet, then you can assume that most of the other markets are doing the same thing. In general, this is a market that I think continues to see a lot of noisy behavior, but quite frankly whether or not we get some type of impulsive move could be an entirely different question.
GBP/JPY Video 16.08.21
We have been in an uptrend for quite some time, but the market will need some type of catalyst in order to get a bigger move. After all, we had seen the market shoot straight up in the air, and now a little bit of choppiness would make a certain amount of sense. However, if we were to break down below the hammer from four weeks ago, then it opens up a huge move to the downside, to at least the ¥145 level, possibly even down to the ¥140 level. That would be a very negative sign when it comes to risk appetite, and I suspect that you would see it show up in multiple markets, not just this one.
On the other hand, if we were to break above the ¥155 level, then it is very likely that we break out and continue to go much higher, completing the initial push to the upside in a “buy-and-hold” type of marketplace. This would also be seen bullish for multiple other marketplaces around the world.
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