- The GBP/JPY has broken above the ¥170 level rather significantly during the trading session on Friday, and even broke above the ¥171 level.
- By doing so, the market has now left that previous resistance barrier in the dust, so therefore it makes a certain amount of sense that we should see a bit of follow-through.
- It’ll be interesting to see how this plays out, because the Bank of Japan has stepped in occasionally to cause problems, but I think now they have no real recourse for the Japanese yen selling that we have seen so much of.
The fact that we have broken above here is a very blue sign and I think we need to pay close attention to this pair now. It’s very likely that we could go looking to reach the ¥175 level, but at this point it’s likely that pullbacks will continue to see plenty of buyers on dips, because quite frankly people will be looking to take advantage of any sense of value.
Waiting for Consolidation
If the Bank of Japan continues to fight interest rates rising, they must print Japanese Yen to do so. They are buying unlimited bonds, so therefore it’s difficult to imagine a scenario where the Japanese yen continues to strengthen for any significant amount of time. In fact, now that we have broken out the way we have over the last 24 hours, it looks to me like we are about to see a rush into this. Again. Do not get me wrong, I think the British pound has plenty of its own issues, but at this point it’s obvious that the market has made up its mind, and therefore if we go much higher.
I believe that there is a massive amount of support at the ¥170 level, but then again at the ¥165 level. It’s not till we break down below that level that I would be worried about the uptrend, and even then, it’s very likely that we would simply see more consolidation than anything else. This is an extraordinarily bullish market, and it will continue to be that way going forward if the Bank of Japan holds its stance on keeping the 10-year yield down to 0.25% in that country.
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