The GBP/JPY pair went back and forth during the course of the session on Thursday, bouncing just around the 195 handle. We are just below there though, so the market is trying to build up momentum in my opinion to break out finally. If we get above the 195 handle, this market should go to the 200 level next. After all, the British pound is doing fairly well against most currencies, while the Bank of Japan continues to work against the value the Japanese yen in general. I think this is a bit of a “perfect storm” at the moment, and eventually we will get the upward momentum that I am anticipating.
Pullbacks at this point in time should be well supported down to at least the 192 handle, if not the 190 level. I think that as long as the Bank of Japan works so feverishly against the value of the Yen, this pair can only go higher given enough time. I also recognize that the GBP/USD pair is showing signs of support, and that of course is a very bullish sign for the British pound in general. Because of that, I think that the British pound could be one of the biggest movers against the Japanese yen.
Buying breakouts, buying pullbacks
There are only 2 things that I will do in this particular pair right now: buy breakouts and buy pullbacks and show signs of support. I think you’ll get plenty of opportunities to do either one, so this point in time I am not even looking at selling the British pound against the Japanese yen. Given enough time, I think that the inertia build up to the point where we break out and perhaps see this pair go much higher between now and the end of the year. This is one of my favorite pairs, it does tend to move quite rapidly if you are correct. There could be a lot of money to be made to the upside.
