The GBP/JPY has initially fallen during trading on Wednesday but has turned around to show signs of life as we continue to find buyers against the Japanese yen. Keep in mind that the Bank of Japan continues to do everything it can to fight interest rates rising in that country, so if global yields start to rise again, that is going to force them to print more yen to buy bonds and drive down returns.
The 50-Day EMA sits just below, which of course is a technical signal, but a lot of people will pay attention to. The 50-Day EMA is sitting right around the ¥166.33 level, so that might be an area that I would watch very closely. Looking at the chart, it’s obvious that the market has a certain amount of resistance near the ¥168 level, but I also believe that there’s an even more important resistant barrier at the ¥170 level.
I Don’t See Much Changing
- If we were to break above that level, then I think there’s a good chance that the market really starts to take off, perhaps reaching to the ¥172.50 level, essentially where the high was recent.
- On the downside, if we were to break down below the 50-Day EMA, then it’s likely that the market could go looking to the ¥165 level underneath, which is an area where we have seen a lot of support for a while.
- Either way, the market is likely to continue to see a lot of buyers on dips as we have seen over the longer term but having said that it is likely that we have the “buy the dip” mentality in full force, as it has been for quite some time.
At this point, I don’t see much change, at least not until we were to break down below the ¥165 level at the very least. That doesn’t seem very likely anytime soon, so therefore you are more likely than not going to see a situation where we have a lot of volatility, but an overall uptrend that should continue well into the end of the year. Speaking of the end of the year, you should also keep in mind that liquidity is going to continue to be an issue once we get through this week, traders will be focusing more on the holidays than anything else.
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