The British pound initially rallied against the Japanese yen during trading on Wednesday but continues to struggle to break out to the upside. Because of this, I do believe that it is probably only a matter of time before we get some type of short-term pullback. Nonetheless, this is a market that is trying to break out and the Japanese yen has been on its back foot for a while. The caveat with this pair is that it is highly correlated to risk appetite, and therefore one would think that you will have to watch other assets as well.
GBP/JPY Video 06.05.21
Underneath, the ¥150 level is significant support based upon psychology, and of course the 50 day EMA sits right there as well, so that will attract a certain amount of attention. The market is going to be choppy regardless, so at this point time there is no reason to get huge in this market, but it certainly looks as if we are trying to make a decision as to whether or not we can build down enough momentum to go much higher. If we can break above the ¥153.50 level, then the market is likely to go looking towards the ¥155 level.
On the other hand, if we were to break down below the 50 day EMA it could very well reach down towards the ¥145 level which is not only a large, round, psychologically significant figure, but it also features the 200 day EMA as well. With this, I think that we are simply going to chop around back and forth while trying to figure out where to go next.
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