- The GBP/JPY displayed commendable resilience during the recent trading session, following its initial dip against the Japanese yen.
- This intriguing price action hints at the market's ongoing quest to determine whether it can make further headway toward the coveted ¥187 level.
- It's worth noting that this particular level had previously served as a formidable resistance point, making it an enticing target at the present moment. Short-term pullbacks in the current landscape persist in offering attractive opportunities for prospective buyers.
Beneath the surface, the 50-Day Exponential Moving Average is hovering around the ¥183 level and is also exhibiting signs of an upward trajectory. This technical support factor is poised to provide a degree of assistance to the market's upward ambitions. Given these developments, I find merit in the strategy of capitalizing on price dips, and I maintain the conviction that the Japanese yen will face significant depreciation not only against the British pound but against most other major currencies worldwide. This phenomenon can be attributed to the ongoing interest rate predicament confronting the Bank of Japan. As they try to keep interest rates suppressed, the appeal of the Japanese yen diminishes.
In line with my outlook, I perceive any pullback as a favorable buying opportunity. Moreover, I anticipate that the 50-Day EMA will serve as a reliable support level. It is also imperative to emphasize the significance of the ¥180 level, positioned beneath the current price action. This level has not only demonstrated its significance in the past but also holds considerable psychological weight as a major round number. Consequently, it is likely to draw substantial attention from market participants.
Be Patient
While an immediate descent to the ¥180 level appears unlikely, it serves as the "worst-case scenario" for the market at this juncture. Investors should closely monitor this level and recognize that it may act as a catalyst for market entry should prices gravitate towards it, provided other market conditions remain unchanged. The overall sentiment points towards a bullish bias, with an emphasis on the potential for a vigorous ascent once the ¥187 level is breached. This anticipated breakout could propel the market towards the ¥190 region.
At the end of the day, the British pound's resilience against the Japanese yen presents an opportunity for traders. The evolving technical landscape, coupled with the underlying factors affecting the Japanese yen, supports a bullish outlook. Patience during potential pullbacks and a keen eye on key support levels remain essential components of a reasonable trading approach.
Ready to trade our Forex daily analysis and predictions? Here are the best forex trading platforms UK to choose from.