The British pound has broken down rather significantly during the course of the trading week to test the ¥150 level. This of course is a large, round, psychologically significant figure that a lot of people will be paying attention to, and therefore the fact that we are starting to find just a little bit of support should not be a huge surprise. However, if we take out the massive hammer from roughly 5 weeks ago, that could open up massive selling in this market, perhaps sending the market racing towards the ¥145 level rather quickly. That being said, the ¥145 level is simply a large, round, psychologically significant figure, and not necessarily anything that is overly important.
GBP/JPY Video 23.08.21
This pair of course is going to be highly sensitive to risk appetite, so as that waxes and wanes, this market will move right along with it. That being said, if we do break down below the hammer from five weeks ago, it is likely that we could see a sudden move, so keep that in mind. As far as buying is concerned, we need to at the very least take out the top of the weekly candlestick we just printed, and even then, I would be a bit cautious as I think the ¥152.50 level has offered quite a bit of resistance in the past.
All things been equal, this is a market that looks very threatened, and you could even make a bit of an argument on the daily chart that we are in the process of forming a massive head and shoulders. Because of this, you definitely need to keep your eyes open on risk appetite in other markets to give you a bit of a “heads up” as to what could happen here.
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