- The British pound initially plunged against the Japanese yen, but we are starting to see a certain amount of technical support right around the 193 yen level.
- It's also worth noting that the 50 day EMA and the 200 day EMA indicators are sitting right there.
- So that does suggest that there are some traders willing to step in and pick this market up.
That does make a certain amount of sense due to the fact that we get paid to hang on to this GBP/JPY pair to the long side, the interest rate differential between the United Kingdom and Japan still remains a mile wide. And of course, recently, we've seen the Bank of Japan suggests that they are not quite as bullish as they once were. If that does in fact end up being the case, then I think we've got a situation where traders are going to continue to see a lot of volatility here because this is a pair that's driven by a lot of risk appetite issues. So that is something worth watching.
In General, I am a Buyer
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But ultimately, I also think that you have to favor the upside in general, but you have to be very cautious with your position size. If we can rise above the 196 yen level, then it opens up a move toward the 200 yen level and all things being equal. That's actually what I prefer, but if we were to break down below the lows of the trading session for Tuesday, we might have to reset and test that crucial 190 yen level underneath, which of course is a large round psychologically significant figure and an area that has been important multiple times. I am bullish, but that's more of a long-term outlook. In the short term, expect a lot of choppy behavior.
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