GBP/JPY Forecast July 11, 2017, Technical Analysis

The British pound initially tried to rally against the Japanese yen but pulled back slightly as we continue to hang about the 147 level. This is a market that has been grinding higher over the longer term, and that’s the key word here: grinding. I don’t think that the markets going to be able to fall for any real length of time, because quite frankly the Bank of Japan looks likely to keep interest rates low for the long term. On the other hand, the Bank of England may have to raise rates relatively soon. I think that given enough time we will break towards the 150 level, but we are bit overextended in this sideways grind is probably a good way to build up momentum so that we can continue to the upside over the longer term.
Buying dips
I believe in buying dips, for short-term gains. I’m not looking for explosive moves, but little 20 or 30 PIP moves should be doable. If we break down below the 146 level, then I think we go to the 145 handle which I believe is even more supportive than the areas that we are testing now. It’s not to say that this will be easy, but it certainly seems as if the market is favoring the upside overall, and if that’s the case I don’t have any interest in shorting the market. I recognize that the 150 level is going to be difficult to overcome but once we do, this market is free to go much higher over the longer term. In the meantime, it’s short-term gains that I see happening in this market and I believe that we will eventually build up the momentum, but patience will be needed to trade this market.