GBP/JPY traders have been on a selling spree since the pair was rejected at 168.00
Will the daily chart’s 200 SMA provide a legit support for the pair?
Here’s a setup that I’m looking at:
GBP/JPY: Daily
In case you were too busy watching the Johnny Depp-Amber Heard drama, you should know that risk assets have been having a tough couple of weeks as traders worried about high inflation, higher interest rates, and slower global growth.
GBP/JPY, in particular, felt the extra bearish pressure when markets started pulling out of their equities and crypto holdings and started buying more traditionally “safe” assets like government bonds and the yen.
Guppy is now under trading just under 160.00 after falling to and finding support at the 156.00 zone near the 200 SMA and previous resistance area.
Can GBP/JPY find sustained bullish pressure in the next few days? The U.K. will be printing its CPI report next week which could bring BOE rate hike talks under the spotlight.
Today’s price action also hints that at least some traders are willing to take on risks after a week of selling.
Watch out for consistent trading above 160.00 and the 200 SMA as it could lead to a retest of the 164.00 or even the 168.00 previous highs.
If risk aversion comes back with a vengeance, though, or if traders choose to focus on the BOE toning down its hawkishness in its next policy meetings, then GBP/JPY could break the 200 SMA support and probably head for the 152.00 or 150.00 previous support areas.
Not sure where to place your entry and exit orders? Consider GBP/JPY’s average volatilityGBP/JPY’s average volatility so you don’t get blindsided by volatile currency cross price action!
