- The GBP/JPY experienced a pullback during Thursday's trading session, as it tests the ¥168 level for support.
- This level was previously a significant resistance point, so it is not surprising that it is now offering buying pressure.
- In addition, the Bank of Japan's yield curve control policy is causing the Japanese yen to lose value, which is also contributing to the pound's strength.
While the market is currently trying to build enough momentum to continue going higher, it may have gotten a little overdone, which is why a pullback was needed to find more buyers. However, the pair is already starting to look for buyers around the support level, suggesting that it may turn around soon.
It is important to note that this pair is very sensitive to risk appetite, so it's important to pay attention to sentiment indicators and other markets to get a sense of where investors are putting their money. For example, the S&P 500, bond markets, and other stock indices can be useful indicators of what investors are thinking.
Avoid Shorting the Market
If the market can break above the ¥170 level, it is likely that it will continue to climb toward the ¥172.00 area or even higher, as it becomes more of a "buy-and-hold" market. The massive candlestick that formed last week indicates that there are plenty of buyers willing to get involved and let the market run given enough time.
At this point, there is no reason to consider shorting this market until it breaks down below the ¥165 level, which does not appear to be likely to happen anytime soon given the market's current strength.
TLDR; the British pound has experienced a pullback as it tests the ¥169 level for support. This level was previously a significant resistance point, but it now offers buying pressure. The Bank of Japan's yield curve control policy is causing the yen to lose value, which is also contributing to the pound's strength. While the market is currently building momentum, it may have gotten overdone, leading to a pullback. However, if the market can break above the ¥170 level, it is likely to continue climbing higher. Investors should pay close attention to sentiment indicators and other markets to get a sense of where risk appetite is heading.
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