- The GBP/JPY marked a significant rally in Wednesday's trading session, firmly establishing its position above the ¥185 level. This breakthrough represents a notable achievement after repeated attempts, underscoring the emergence of a prevailing "buy on the dips" sentiment.
- This stance assumes a continuation of short-term pullbacks, a scenario that seems plausible given the probable upward trajectory.
- Consequently, the prospect of shorting this pair holds no appeal for many traders. The 50-Day Exponential Moving Average, positioned near ¥180, functions as a vital gauge of the bullish trend's resilience.
Upon examining the chart, the path to the ¥190 level appears imminent, though acknowledging the considerable journey ahead is essential. Additionally, considering a more extended timeframe, a venture towards the ¥200 level emerges as a longer-term target. While the magnitude of such a move might appear substantial, the interest rate differential remains a decisive factor in sustaining the potential for higher pricing. In light of this, the trajectory's ascent seems inevitable, with traders receiving incentives to retain their positions, a dynamic that large institutions are unlikely to overlook, capitalizing on favorable financing rates.
We Could Go Much Higher
Intermittent pullbacks are to be anticipated, offering an opportunity to uncover value in a market that exhibits extended trends over the past few weeks. This perception aligns with the broader strategy, capturing potential opportunities during corrective phases. Given the recent bullish breakthrough beyond the psychologically significant ¥185 resistance level, it's a zone that holds potential for future support, albeit with a degree of potential noise. I think at this point, the foregone conclusion is that it is only a matter of time before we go much, much higher.
In summation, the British pound's journey in the trading landscape underscores the potent interplay between bullish momentum and strategic support levels. Wednesday's rally above ¥185 signifies a notable victory, mirrored by the "buy on the dips" stance among traders. A short-term pullback scenario reinforces this sentiment. While the path to ¥190 and beyond is inevitable, the sterling's appeal rests on the intricacies of the interest rate differential. As the market navigates through occasional retracements, the landscape presents value-finding opportunities in alignment with the overarching bullish trend. Amidst these dynamics, a watchful eye on key resistance-turned-support levels, like ¥185, will prove instrumental in steering traders through the market's fluctuating currents.
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