Potential signal:
- I am buying on a daily close above 212, with a stop at 211, and a target of 214.
- The British pound continues to see strength against the Japanese yen, as we are looking at a carry trade that continues to perform well.
- With both banks likely to hike soon, it’s a “wash” as far as rates are concerned.
GBP/JPY
The British pound rallied significantly during the trading session on Monday to test the ¥212 level. The ¥212 level is an area that a lot of people will be watching due to the fact that it was previous support.
Top Regulated Brokers
Ultimately, this is a market that I think continues to see a lot of interest in this area, and the fact that the 200-day EMA and the 50-day EMA are flat. If we can close above ¥212, it is possible that the British pound would continue to go much higher.
You continue to get paid to hold to the long side of this pair
The overall market continues to be one that pays you to hold. It looks as if the ascending triangle is something that you need to watch, and if we do break out to the upside, the measured move could lead the pound toward the ¥216 level. The interest rate differential continues to favor the upside.
The overall market continues to be one that pays you to hold, and I think a lot of traders out there are going to continue to see plenty of value on dips. I have no interest whatsoever in shorting this pair. In fact, this could set up for a very nice carry trade for the next several months.
The Bank of England is expected to raise rates, and the Japanese are as well, so basically it washes out. Ultimately, this is one of my favorite pairs to watch, and we are testing a crucial level at the moment.
Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.