British Pound Pulls Back Against Yen Toward Support
The British pound has initially tried to rally during the course of the week but found resistance at the familiar ¥157.50 level to pull back against the Japanese yen. It should be kept in the back of your mind that the Japanese yen is considered to be a major safety currency, so therefore if there is a run towards safety, this pair will fall. Furthermore, you can make a strong argument that the British pound itself is a little overbought, not only against the Japanese yen, but against almost all other currencies. Because of this, it is not a huge surprise to see how this market is behaving. If we continue to see the fear out there that we have seen over the last several sessions, this pair will almost certainly slice through the ¥155 level and then go much lower.
GBP/JPY Video 17.01.22
To the upside, if we can take out the ¥157.50 level to the upside, that would be an extraordinarily bullish sign and have this market looking towards the ¥160 level given enough time. I do not necessarily think that is going to be easy to do, but it is a very real possibility that you need to keep in the back of your mind. I think the most important thing you can do with this pair right now is keep your position size small, because quite frankly it is going to get thrown around like a ragdoll in this type of environment. The pair used to be known as the “Dragon”, and I think we may see more Dragon like behavior going forward, so it is probably worth being as cautious as possible.
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