The British pound has rallied significantly during the course of the week to show signs of strength, reaching the ¥156.50 level. The market has been very strong, but it looks as if the ceiling is getting very close. That being said, if we were to break out above the ¥158.50 level, then it is likely that the market goes towards the ¥160 area. The market will continue to see a lot of volatility, and I do think that it is going to be difficult to hang on to the upward momentum without some type of major catalyst.
GBP/JPY Video 21.03.22
It is worth noting that this pair has been in a range for a while, and therefore until it proves itself, you really cannot get overly excited one way or the other. That being said, it is possible that we get a bigger move in either direction, but I will probably have to drill down to shorter time frames in order to get the trigger price.
Until we break out of this consolidation area between ¥158 and ¥149, I think you have to look at this as a situation where it is just going to be noisy overall, and therefore, I think you need to focus more on shorter-term charts. The pair is highly levered to risk appetite, so you need to pay close attention to how other markets are performing. The Japanese yen is considered to be “safe”, while shorting it means that there is a lot of risk appetite out there. Keep an eye on stock markets.
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This article was originally posted on FX Empire