GBP/JPY Price Forecast – British Pound Continues to Motor Higher

The British pound has rallied a bit during the trading session on Thursday again to reach towards the ¥147.50 level. This is an area that will more than likely cause a little bit of resistance, as we have seen of the last couple of days. Quite frankly, this is a market that is a bit overdone, so I think we are at risk of a major pull back. Do not get me wrong, I have no interest in shorting this market, but I do recognize an overbought condition when I see it. The market has gone straight up in the air, and quite frankly at this point you have to wonder who would be left to start buying?

Underneath, the ¥145 level offers quite a bit of support from what I can see, and of course is a large, round, psychologically significant figure. Ultimately, the market needs to pullback in order to attract more buyers, but you certainly cannot be a seller because of just how brutal this move has been. The parabolic nature of this move will more than likely offer a very significant pullback for those who are willing to wait on it, but I would not be jumping in right now because “chasing the trade” is an excellent way to lose a lot of money.

It is not until we break down below the 50 day EMA that I would be concerned about the overall trend, and right now that is all the way down at the ¥142.50 level. In other words, it is 500 points away, so this is simply a “buy on the dips” scenario.