- In my daily analysis of the GBP/JPY pair, we have seen a lot of strength coming out of the British pound, or perhaps more to the point, we have seen a lot of weakness coming out of the Japanese yen.
- The reason I say this is that the JPY has lost strength against multiple currencies not just the British pound itself.
- That being said, this is a market that I want to lie, because when you get the direction of the GBP/JPY pair correct, you quite often get paid quite nicely.
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Technical Analysis
The technical analysis for the GBP/JPY pair is worth noting, as we are hanging around the 50 Day EMA indicator. If we can break above here, that’s yet another reason to think that the British pound will continue to ascend against the Japanese yen, but quite frankly it’s probably more important to keep in the back of your mind that the Japanese yen itself is getting pummeled by just about everything out there. This even includes the lonely Swiss franc!
Now that we are above the 200 Day EMA and we are starting to see the Stochastic Oscillator reach toward the high, I think we are going to see more momentum come into the picture. I think that the consolidation is over with after the massive drop, and it would not surprise me at all to see the British pound goes looking to the ¥200 level. I don’t think this is an easy move, nor do I think it happens overnight. However, in the meantime I think that we have got a situation where most traders are going to be looking for buying opportunities on short-term pullbacks. With this, think you need to be somewhat diligent with your position sizing, building up as you go along. If we were to somehow break above the ¥200 level, again something I’m not expecting to see this week, that opens up the next leg higher.
On the other hand, if we were to turn around a breakdown below the ¥191.50 level, then I think we might be in a little bit of trouble. I would also expect to see that JPY is strengthening almost everything else, something that you did a few weeks ago.
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