GBP/JPY Daily Outlook - Nov. 21, 2012

Christopher Lewis

The GBP/JPY pair rose during the session on Tuesday as we smash through the 130 handle. This is one of the favorite pairs for so-called "carry traders" to be involved with as the swap is fairly strong, and the movement in this pair tends to be rather exaggerated. In other words, you can make a lot of money in a very short amount of time.

However, let us not forget that you can lose a lot in a short amount of time as well. With this being said, it does appear that we have broken through a significant resistance area, and we should continue much higher. It doesn't mean that it will be a straight shot higher obviously, but we think that ultimately this market should continue gaining as the British pound suddenly looks relatively strong against the Dollar, and the Bank of Japan is working so hard against the value of the Yen.

135 and beyond

Think as long as we don't have financial shocks to the system, this pair can continue climbing for quite some time. It has a nice swap at the end of the day, and now that we are breaking through the 130 resistance level, we could run as high as 135 in the relatively short term. This pair does correct from time to time, as all markets do, and these corrections can be rather swept. If you know this ahead of time however, you can take appropriate steps to mentally prepare yourself as well as set stops in order to take advantage of the longer-term bullishness of this market.

GBPJPY Daily 112112

Looking forward, I believe that this market will continue to gain over time as the seemingly "infinite" quantitative easing out of Japan that is coming should continue to weaken the Yen. Quite frankly, they've had to do drastic things in the past such as 1995, and as such they are prepared to do this. Unlike most central banks, the Japanese truly know how to manipulate a market if they have to.

With all of this being said, I am a buyer of this market, and not a seller. On dips and shows any signs of support on the short-term chart, I would be willing to go long of this pair.

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.