British Pound Plummets From the Big Figure Against Yen

The British pound has initially shot higher against the Japanese yen during the trading session on Wednesday but then had to recognize gravity, as the market had gotten far too ahead of itself. At this point, it looks like we are getting ready to reenter the previous consolidation area, which could have longer-term ramifications. Whether or not we break down completely is a different question, but quite frankly we could drop all the way to the ¥157.50 level without changing much due to the fact that we had gotten so far ahead of ourselves.

GBP/JPY Video 24.03.22

The pair is highly sensitive to risk appetite, so you should probably keep an eye on stock markets and how they are behaving. Ultimately, this pair rises when people are feeling good about the markets and falls when people are not. The vicious rally that we had seen in various stock markets around the world over the last several days has been somewhat unsustainable, so would not surprise me at all to see this market will fall right along with them.

If we do turn around a break above the top of this candlestick without getting a significant pullback, I would be very concerned at that point, because it is well beyond parabolic and then you are starting to enter the realm of insanity. Whether or not going higher is the right choice is a completely different question, but markets cannot go straight up in the air forever. Sooner or later there is nobody left to buy, and I think we are getting relatively close to that timeframe. I am not willing to short this market, I just recognized that it is foolish to buy it all the way up here.

For a look at all of today’s economic events, check out our economic calendar.