The British pound initially pulled back against the Japanese yen during the trading week, but then turned around to show signs of strength again. By doing so, the market looks as if it is trying to break out to the upside, which would be very good for risk appetite in general. Quite frankly, when you look at the daily chart, it is a little more convoluted as the market looks as if it is still stuck in some type of complex head and shoulders. In other words, I think this is going to be a very difficult market to hang on to in the short term. Longer-term, we should get a reasonable signal rather quickly.
GBP/JPY Video 13.09.21
To the downside, I still see the ¥150 level as a 100 PIP support region that will keep the market propped up. If we were to break down below that area, things could get rather ugly, and we would sell off rather drastically. On the other hand, if we clear the ¥153 level then we are likely to go looking towards the ¥155 level again. This is an area that has been like a bit of a “brick wall” as of late, but I do think that it is only a matter of time before we break through there if we continue to press the issue. Either way, keep an eye on other markets overall, because it could give you an idea as to where this market will go based upon risk appetite alone as the Japanese yen is considered to be the ultimate safety currency.
For a look at all of today’s economic events, check out our economic calendar.