GBP/JPY Forecast May 11, 2017, Technical Analysis

The British pound rallied during the day on Wednesday against the Japanese yen, and even broke above the 148 handle for a short while. The 24-hour moving average continues to offer support, and I believe that every time we pull back to that level, some traders will be willing to go long. However, the most important thing that is going to happen is the Bank of England releasing an interest rate decision, and more importantly the accompanying meeting minutes. I believe that the British pound may be a bit difficult to trade until we get that announcement, but if there’s any signs of bullishness or hawkishness out of the central bank in London, this market should breakout to the upside.

The importance of the 148 handle

I believe that if we can break above the 148 handle, that clears the way for the 150 level at the very least. Short-term pullbacks continue to find buyers, but I think volatility will continue to be an issue. This market tends to be choppy in general, and that probably isn’t going to change between now and the announcement. I don’t have any interest in selling this pair, although I do recognize that a move below the 147 level could send us looking for 146 rather quickly. The choppiness of this market is something that must be looked at in a more long-term perspective, and therefore smaller position sizing typically is the best way to go. If we do break above the 140 level after the announcement though, the move could be very sudden and violent to the upside. Marketplace participants seem to favor the upside, so I have course am not interested in finding that move. However, I recognize there may be a bit of position covering between now and the announcement.
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