The British pound has rallied significantly during the course of the trading week to reach the ¥152 level. The ¥152 level is an area that offers resistance for about 100 pips and is essentially “fair value.” Ultimately, if we see some type of risk off type of event, we could turn this market right back around. On the other hand, if we see plenty of risk appetite out there, that will turn the market around and finally scented above the ¥153 level.
GBP/JPY Video 06.09.21
Keep in mind that the last week of August tends to be one of the biggest holiday weeks for traders, and therefore you should pay close attention to the idea of liquidity coming back and changing everything. This is a market that will continue to be somewhat noisy, but ultimately I think we have to make a bigger decision. If we were to break down below the lows of the previous week, that would be an extraordinarily negative turn of events. Right now, that does not seem to be the case, so I am not so concerned about it.
There is a bit of a complex topping pattern playing out on the daily chart, but on the weekly chart it is not as clear. Nonetheless, I think we have a couple of weeks’ worth of chopping around and struggling to do before we truly get some type of clarity that we can start putting serious money to work against. That is of course what we are going to have to pay close attention to, simple risk appetite at this juncture. Pay attention to the commodities markets and of course the stock markets to give you an idea as to what traders may be thinking.
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