British Pound Gives Up Gains Against Yen

The British pound initially rallied to reach the ¥157 level before pulling back and showing signs of exhaustion. Ultimately, this is a market that has gotten far too ahead of itself, so a pullback makes a lot of sense. After all, markets cannot go straight up in the air forever so one would have to think a pullback is necessary. Even if you believe that we are going to go much higher, the reality is that we cannot simply go parabolic all the time.

GBP/JPY Video 18.03.22

If we get any type of “risk-off” type of situation, is likely that we will see this pair fall significantly, reaching the ¥155 level. Breaking down below the ¥155 level then opens up a move down to the ¥152.50 level. When you look at the longer-term charts, you can see that we are clearly at the top of what had been the consolidation area, so the fact that we are struggling here makes sense. The market would need to pick up a lot of momentum to finally break out.

At this point, I would not be a buyer until we break out above the ¥158 level, which then opens up a move to the ¥160 level. Either way, this is a market that is going to be rather volatile, but that is the normal state of this pair, so do not be surprised at all. This is a scenario where if the risk appetite increases, then we go higher. Alternately, if we see a major amount of fear out there, then it is likely that the pair falls rather significantly. There are plenty of reasons out there that could cause major issues.

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