The British pound has rallied quite significantly during the course of the week, slicing through the top of the inverted hammer from the previous week. This has been a massive move, and it almost certainly brings the ¥155 level into the picture now. Short-term pullbacks might be thought of as buying opportunities, and as long as we have more of a “risk on attitude” around the world, that should help this pair go higher anyway. Remember, the Japanese yen is considered to be a safety currency, so the British pound is quite well against it when people are willing to put risk on.
GBP/JPY Video 27.12.21
The size of the candlestick is relatively impressive, and the fact that we are closing towards the very top of it tells you just how convinced the buyers were that we should get long of this market. Because of this, I think it is simply a matter of finding value when you can, and then taking advantage of it. If we can break above the ¥155 level, then this thing could really get moving, perhaps reaching towards ¥160 over the longer term.
I do not know that it will happen in the next week or so, just simply because of liquidity issues. Nonetheless, it is very obvious that this market has changed its tune completely and has a lot more buying pressure than selling pressure at the moment. The pair continues to defend that ¥150 region, which now is looking more and more substantial as time goes on. Ultimately, am a buyer on dips when they occur.
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This article was originally posted on FX Empire
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