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Christopher Lewis
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GBP/JPY

The British pound has rallied a bit during the course of the trading session on Tuesday to break above the top of a couple of shooting stars. This is obviously a very bullish sign, but to say this market is overextended would certainly be reasonable. I think this market definitely needs to pull back, as the market is parabolic. Nonetheless, I think it is only a matter of time before the buyers would come back in and pick this market up.

GBP/JPY Video 24.02.21

To the downside, the ¥145 level should be massive support as it was previous resistance. That being the case, the market is likely to see a significant pullback only to see buyers jump back in to pick it back up. We could also see support at higher levels such as the ¥147 level. All things being equal, this is a market that I think is going to go looking towards the ¥150 level. The ¥150 level is an area where I would anticipate a lot of resistance based upon previous action, and of course the fact that it is a large, round, psychologically significant figure. Nonetheless, the market is overcooked side do not have any interest in trying to pick it up here.

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The British pound has rallied quite significantly as the vaccinations rollout in that country, and of course this is a market that has reflected that. I think longer-term we probably even go above the ¥150 level, but we need to come back down to earth first. If we were to break down below the ¥144 level, then I might be a little bit more concerned, but until then this is a “buy on the dips” type of situation.

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

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