The British pound has fallen significantly during the course of the trading week to pierce the ¥150 level. The ¥150 level is a large, round, psychologically significant figure, so therefore it is likely that we will see a certain amount of support if we reach down towards that area. That being said, if we were to break down below the weekly hammer, that is a very negative sign and could send this market much lower. At that point, I believe that we would go looking towards the ¥145 level, possibly even the ¥142.50. That is obviously going to be a major “risk off move”, and therefore I think it would show itself in multiple markets.
GBP/JPY Video 26.07.21
On the other hand, if we break above the top of the weekly hammer, then it opens up the possibility of a move towards the ¥155 level. Keep in mind that the market is highly sensitive to the risk appetite of traders around the world, as the Japanese yen is considered to be a major safety currency. All things being equal, this is a market that I think has a lot of questions to ask of itself, but will get its cues from multiple other market such as the stock market, commodities, etc.
In general, we are trying to hang onto an uptrend, so I think we are either going to get a big move or noisy behavior. If the market were to break down below this hammer, I think that the negativity would overtake the market and it could be rather quickly. At that point, I would be very aggressive to the short side.
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