- The British pound’s early gap lower against the yen quickly reversed, reaffirming the strong uptrend.
- A break above ¥205 could accelerate gains, while pullbacks toward ¥202 or even ¥200 may offer support as Japan’s broader financial stresses persist.
The British pound initially gapped lower against the Japanese yen during Monday trading, but has turned around to show signs of life. After all, this is a market that's been in an uptrend for quite some time, and with that being the case, I think you've got a situation where a lot of traders are trying to push enough to the upside to break above the 205 yen level.
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If the market were to break above the 205 yen level, then we could really start to see a big move to the upside. Short-term pullbacks, I believe, are going to end up being buying opportunities. And therefore, I think you look at the 202 yen level and the 50-day EMA both as potential support regions for this market.
If We Were to Drop
If we break down below there, then you are looking at the possibility of the 200 yen level opening up as a major floor in the market. Anything lower than that probably really sends this market reeling. But at this point, it looks like Japan, whose interest rates are climbing, is in a lot of trouble. There seems to be a certain amount of concern out there when it comes to their bonds.
And you get to have in Japan either a bond crisis or a currency crisis, take your pick. In other words, I think the Japanese are in trouble. This chart will continue to look very bullish, and I think short-term pullbacks are opportunities to get long going forward. It is not until we break below the 198 yen level, which is where the 200-day EMA is, that I even remotely consider the trend over, and even then, I would probably have to step back and take a look at everything going on.
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