GBP/JPY Forecast – British Pound Pulls Back Slightly Against Yen

GBP/JPY Forecast Video for 23.02.23

British Pound vs Japanese Yen Technical Analysis

The British pound has pulled back just a bit during the trading session on Wednesday, as we have seen a little bit of a pullback from that move to the upside on Tuesday. Tuesday was a major breakout, so it does make quite a bit of sense that we would have a little bit of exhaustion and profit-taking head back into the market. The ¥162.50 level is an area of previous resistance that now should offer support, from the major bottoming pattern that we had formed over the last couple of months. Keep in mind that the interest-rate differential is extraordinarily high between Great Britain and Japan, as the Bank of Japan is continuing to fight interest rates rising in that country, with a cap of 50 basis points on the 10 year yield. As that happens, it’s likely that we will continue to see the Japanese yen lose strength overall, as we had seen last year.

If we were to pull back below the ¥162.50 level, then it’s possible that the market could go down to the 200-Day EMA, and then the 50-Day EMA underneath there. The ¥161.50 level underneath is the confluence of those moving averages, so it does make quite a bit of sense that we would see perhaps some support in that general vicinity. That huge bottoming pattern was quite impressive and took a long time to form after that major selloff. Because of this, and the fact that we are seeing the yen weaken against most other currencies, it does make a certain amount of sense that there will be momentum in this market overall. The size of the candlestick on Tuesday was quite impressive, so one would have to think that there’s probably a bit of follow-through coming.

Buying on dips will be the strategy that I employ, at least until we break through those major moving averages. On the upside, I suspect that we are going to go look into the ¥165 level, where we had sold from quite drastically, and of course where we had previously seen quite a bit of support last year.

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