The GBP/JPY markets rose during the session on Thursday, slicing through the 160 handle without much fanfare. As a matter of fact, this resistance area got sliced through so quickly that I was a bit caught off-guard by that strength, and as a result am looking for a bit of a pullback in order to get involved to the upside in this market as it looks so bullish now. Based upon the recent consolidation in the breakout, I expect to see this market go to the 165 handle, where we would see significant resistance again based upon the large round psychologically significant aspect of that handle.
Going forward, I fully expect this market to be strong, and it makes sense because it is a "risk on" type of move. We are starting to see world indices show strength around the boards, and as a result the Pound of course will be preferred over the Yen. That's always the case in these types of moves, and this is one of the wildest pairs you can trade in order to take advantage of global bullishness.
Interest rate differential and "risk on."
The interest rate differential between these two currencies will continue to push this pair higher overall, and I do believe that buying dips will be the way to go. That being the case, I think short-term traders and long-term traders alike will take advantage of this and as a result we will push this market much higher over time. I believe that the 159 level will be a bit of a "floor" in this marketplace going forward, and as a result any pullback to that level for above that show signs of support will be a buying opportunity as far as I can see. I would also expect this pair to go higher than 165 over longer-term time periods, but it could be a bit of a bumpy ride up there. There is absolutely no scenario in which I'm interested in selling this market as it should be positive over the longer term.
