The GBP/JPY pair fell initially during the day on Monday, but found support somewhere near the 185 handle. Because of this, we turned back around and formed a nice-looking hammer. With this, I feel it’s only a matter of time before the market rallies, and that of course is being helped by the fact that the GBP/USD pair formed a hammer. After all, that shows relative strength of the British pound against most currencies anyway, as the US dollar is without a doubt the most important currency to be measured against. With this, you have to keep in mind that the British pound showing strength against the US dollar should translate into a higher rate against the Japanese yen as well.
Ultimately, I feel that this market is probably going to go to the 187.50 level next, and then perhaps above there. If we can break above the 187.50 level, we should then head to the 190 level. I think that there is going to be rather resistive, but should be a target nonetheless.
Bank of Japan
The Bank of Japan of course has been working against the value of the Japanese yen for some time, and I do not think that is going to change anytime soon. There are calls for more quantitative easing out of Tokyo, and I think we will see it sooner or later. However, it might not be until next month before we see it, but truthfully the Forex markets tend to try to anticipate the next move anyway, so it makes sense that we start going higher.
Even with this, I believe that pullbacks will simply represent value more than anything else. Any type of supportive candle should have the buyers interested, simply because there is so much in the way of bullish pressure from the last several candles. I have no interest in selling this pair at this moment in time.
