- The GBP/JPY exhibited a slight pullback against the Japanese yen during Tuesday's trading session, reflecting ongoing noisy behavior in the market.
- Given this context, it is important for traders to exercise caution when determining position sizes.
- The prevailing characteristic of the market remains its inherent volatility, making it a key aspect to monitor closely.
The ¥175 level serves as significant resistance, representing a psychologically important price point that has played a crucial role in the past. Breaking above this level would open up the possibility of a more substantial upward move. However, the initial target is set at ¥175. It is worth noting that the ¥170 level is anticipated to act as a substantial support level, drawing close attention from market participants. Additionally, the presence of the 50-Day Exponential Moving Average (EMA) in close proximity reinforces the significance of this support level. Consequently, buyers are likely to emerge in the area, taking advantage of what they perceive as a favorable exchange rate for the British pound against the Japanese yen. It is important to consider the negative sentiment surrounding the Japanese yen, largely influenced by the Bank of Japan and its yield curve control measures. This backdrop further reinforces the potential for the British pound to appreciate against the yen.
Noise Ahead
From a broader perspective, each pullback in this market is viewed as an opportunity to buy, given the clear bullish trend. The longer-term outlook suggests that the market will continue to play out in a bullish manner. It is important to recognize the strength of the trend and avoid attempting to identify a potential reversal at this point. Consequently, the prevailing expectation is that the market will continue to exhibit considerable noise but maintain upward pressure until there is a fundamental shift in Tokyo.
In conclusion, the British pound experienced a minor pullback against the Japanese yen during Tuesday's trading session, characterized by the market's noisy behavior. Traders should exercise caution and pay close attention to position sizes. The ¥175 level represents a significant resistance level, while the ¥170 level serves as a substantial support level, attracting considerable market attention. The prevailing bullish trend suggests that each pullback is an opportunity to buy, as the market is expected to continue its upward trajectory over the long term. Until there is a fundamental change in Tokyo, the market is likely to exhibit noise but maintain its upward pressure.
Potential signal: a break above the 173.83 level is a buy signal, with an initial target at the 175 level. At that point, this market could really start taking off, perhaps to 177. Stop loss would be at the 172.60 level.
Ready to trade our daily Forex forecast? Here’s a list of some of the best regulated forex brokers to check out.