- The GBP/JPY has been relatively quiet during the trading session on Tuesday, as we continue to see the market try to go to the upside, but it has run out of momentum.
- Because of this, it’s likely that the market will continue to try to go to the upside, but ultimately this is a market that may be running out of momentum since it has been so noisy to begin with.
- After all, this is a pair that can wear traders out, as it is horrifically volatile.
The 50-Day EMA sits underneath and is offering a certain amount of support, near the ¥165.80 level. It is rising, so that should offer a bit of dynamic support, but all things being equal, I believe that there is even more support near the ¥165 level. I have no interest in shorting this pair, even though I would anticipate a bit of a pullback. That should offer plenty of opportunity for a bigger move, and you can even make an argument that we are trying to bust out of a “falling wedge”, which is a bullish pattern.
Japanese Yen Likely to Continue Losing Ground
On the upside, there’s obviously going to be a lot of interest in the 170 level, and then beyond that at the shooting star that had been formed at the ¥172 level. Anything above there would obviously be fresh new ground that the market would have to deal with, but it’s going to take a lot of effort to make that happen. All things being equal, think you continue to buy dips in this market, and then take advantage of value as it occurs.
Granted, the British pound is a currency that is going to suffer at the hands of a 2-year recession according to the Bank of England, but at the same time you have the Bank of Japan printing unlimited yen to buy “unlimited bonds.” If that’s going to be the case, then I have no doubt that the Japanese yen will continue to suffer. Interest rates rising around the world would be disastrous for Japan, but if they do continue to drift a little bit lower, it puts a little bit more fight back into the yen, which has been absolutely hammered this year so far.
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