British Pound vs Japanese Yen Technical Analysis
The British pound has rallied during the trading session on Monday, reaching the ¥185 level. This is an area that a lot of people will pay close attention to, as it has been a bit of a magnet for price, therefore it’s likely that we continue to see a lot of choppy behavior. The ¥187 level above is a resistance barrier. If we can break above there, then the market could go much higher, perhaps reaching toward the ¥190 level.
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All things being equal, you should keep in mind that we are in a huge uptrend, and of course the Bank of Japan does everything he can to keep interest rates lower in that country, thereby driving down the value of the yen. This has been universal, and not just against the British pound but it’s also worth noting that the British pound has a huge interest-rate differential between it and the Japanese yen, thereby making this a pair that offers quite a bit of swap if you just hang onto it, and that is likely what is driving this market overall.
Pullbacks at this point will have to contend with the ¥183 level, and then perhaps even the 50-Day EMA underneath. All things being equal, this is a market that I think continues to offer a “buy on the pullbacks” type of scenario, and I do think that given enough time we go much higher. If we can break out above the recent highs, then I believe that the British pound will go looking to reach the ¥190 level, and then possibly even higher than that to reach the ¥200 level.
In general, I think you continue to buy the dips and ignore selling. If we do sell off from here, the 50-Day EMA and the ¥180 level both could offer plenty of support. Ultimately, I think you have a scenario which will continue to see a lot of volatility, but I do believe that given enough time we will continue to go higher and therefore I have no interest in shorting, at least not until we break down below the ¥180 level and of course the Bank of Japan changes its overall attitude.
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