The British pound has rallied a bit during the course of the trading session on Thursday as we have broken above the highest from the previous week. That is a very strong sign and suggest that this area is simply going to be consolidation and not some type of exhaustion region. With that being the case, I think we do test the highs again and then eventually break out to the upside. This will be especially true if we continue to see the “risk on” type of attitude, as this pair is very sensitive to risk appetite in general. With that being the case, I think that short-term pullbacks are buying opportunities down to the 50 day EMA.
GBP/JPY Video 30.04.21
It does make sense that the market has gone back and forth a bit though, because quite frankly this is a market that had gotten too far ahead of itself and now needs to work off a lot of froth. The last couple of days have been a little bit over bought though, so I would not be surprised at all to see a short-term pullback sooner rather than later. That should end up being a buying opportunity and there are plenty of people out there that will have an interest in trying to get long on the value it would present. Because of this, I like the idea of waiting for the market to pullback and then start buying again. That being said, I do think eventually we break out and go looking towards the ¥155 level so a lot of it is going to come down to how big of a stop loss you want more than anything else.
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