All things being equal, I am bullish but I also recognize that you need to find signs of momentum shifting to the upside.įor a look at all of today’s economic events, check out our economic calendar. That is in the selling anything it’s change, and I think a lot of people will be looking for “cheap British pounds” to take advantage of.
All things being equal, this is a situation where we continue to see a lot of value hunting coming into the market given enough time, but we are a little bit overstretched at this point, and therefore a pullback does make a certain amount of sense.
With the fundamental situation between the Bank of England and the Bank of Japan being so wide, I think it’s possible that we could see the possibility of a move to the ¥200 level. Ultimately, I think the market is trying to build up enough momentum to reach the ¥185 level, perhaps even break above their for a longer-term move. In general, I think this is a situation where you are looking for value, and willing to take advantage of it. Just below there, we have the 50-Day EMA indicator, which is sitting right around the ¥177 level. Furthermore, we had seen a bit of support in that general vicinity a couple of weeks ago, so it all ties together quite nicely. The ¥180 level underneath is a large, round, psychologically significant figure, and therefore I think a lot of people will be paying close attention to it. Remember, the interest rate differential between the Bank of England and the Bank of Japan is very strong, and therefore it’s likely that we could continue to see a lot of buyers coming in to pick up and take advantage of the “swap” at the end of the day, just like the old “carry trade” days that had been so prevalent in the Forex market a few years back.
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