- The GBP/JPY had a rocky start to the trading session on Wednesday, initially attempting to rally but giving back some of the gains.
- The ¥170 level has been a significant point of interest for traders, offering short-term support to the market.
- In the meantime, the market remains choppy, consolidating and leaving traders unsure of its next move.
One thing that seems clear is the momentum behind the British pound. The Bank of Japan's policy of keeping interest rates low has resulted in printing yen, making the Bank of England's tight monetary policy attractive to traders. This market has continued to see buyers, which may be why short-term pullbacks are being seen as buying opportunities.
The ¥168 level is also a significant support level to watch out for, and if the market breaks down below that point, it may be a sign that the momentum behind the pound is shifting. However, the 50-Day EMA is sitting around the ¥166 level, which is rising and offering support as well. All things considered, this market seems to favor the upside, with short-term pullbacks being seen as opportunities to buy into the market.
Volatility Ahead
But it's important to note that the market is volatile, and risk appetite is a major factor at play. Keeping position sizes reasonable is key, and traders need to be cautious as the market continues to be choppy. This is a market that still has more upward pressure than down, so traders should approach it with a bullish mindset.
If the market can break above the ¥172.50 level, it could be the catalyst for the pair to take off and reach the ¥175 level. However, it's important to note that the market is still very uncertain, and traders need to pay attention to key support levels and indicators to make informed decisions.
Overall, this is a market that is likely to remain volatile in the short term, but the momentum behind the British pound seems to favor the upside. Traders should keep an eye on key support levels, as well as the 50-Day EMA, and be cautious with position sizes as they navigate this choppy market. I remain a “buy on the dip” trader, and I think it is only a matter of time before the momentum picks back up. The Bank of England is expected to raise rates as well, but this is a “known.”
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