The British pound initially tried to rally during the trading session on Thursday but gave back the gains to fall back towards the ¥150 level. The ¥150 level course is a large, round, psychologically significant figure that would attract a certain amount of attention, so therefore it is worth paying attention to how we react. Ultimately, I do think that the markets need to make a bigger decision rather soon, as the choppiness cannot go on forever.
GBP/JPY Video 23.04.21
The candlestick is not overly confidence inducing, but it should be noted that this area has been tested multiple times. The 50 day EMA underneath would of course also offer support which is currently at roughly ¥149.25. On the other hand, the market is likely to see a lot of negativity come flying into it if we continue to break down, as it would signify that we have made a “lower high” a couple of days ago.
Keep in mind that this pair is highly sensitive to the overall risk appetite of traders around the world, so that should continue to be paramount in your decision-making. If stocks and commodities are going fairly well, then in general this pair should grind higher. However, if we see a sudden selloff of risk appetite, then we see this market break down under typical circumstances. At this point in time, it certainly looks as if we are trying to find support but if you are not already involved in this pair, I would probably stay away from it until we get a little bit of clarity. We are in an uptrend longer term, so if anything, that is one thing worth paying attention to.
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