British Pound Bounces Against Yen

The British pound has rallied rather significantly during the course of the trading session on Wednesday as we have broken above the 50 day EMA again waiting for the FOMC. Quite frankly, this is a high risk situation that will more than likely cause a lot of pain for traders, because we do not know exactly where we are going based upon risk appetite. The Federal Reserve is more than likely going to be a major influence on what happens next, and of course risk appetite in general. At this point, we have a lot of short covering at this point time, so it makes quite a bit of sense that we will see a bit of a bounce.

GBP/JPY Video 27.01.22

At the first signs of exhaustion, I will be shorting this pair, especially if it somewhere near the ¥155 level. That is an area that has attracted a lot of attention, and therefore I think this could be setting up for a nice shorting opportunity if we get the right hawkishness coming out of the Federal Reserve. That being said, if we do break above the ¥155 level on a daily close, then it is likely that we will see the market race towards the highs, perhaps based upon the Federal Reserve “blinking” at the signs of trouble that certainly would be coming.

If we were to turn around a break down below the ¥152.50 level underneath, then the market is likely to break down rather significantly. At this juncture, it could send this market looking towards ¥150 level, but that of course would be a longer-term play. It would take something quite catastrophically to get there in the next couple of days.

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