(MENAFN- Daily Forex)

• The British pound had rallied early during the trading session on Wednesday, but it looks like it is starting to discover the concept of gravity, after what has been in an explosive 5 days against the Japanese yen.
• The ¥205 level is a large, round, psychologically significant figure that will attract a lot of attention, and it's probably worth noting that the candlestick for the session looks to be a bit of a shooting star.

Technical Analysis

The technical analysis is obviously bullish for this market after the Japanese election, and of course the massive gap higher that jumped over the ¥200 level is a significant area of importance, and I think that's an area where a lot of people would be looking at as a massive support level. The shooting star for the trading session, assuming that's exactly how we close, will end up being assigned that perhaps we are finally seeing some profit-taking, and quite frankly it makes quite a bit of sense considering that many traders out there might have a 400 pip gain in just the last couple of trading sessions.

Ultimately, if we were to break out above the top of the shooting star, then the ¥206 level could be a resistance barrier, but at this point in time I think this is essentially going to be a“buy on the dips” type of scenario, and over the next couple of days we may actually have a chance to do just that. However, extreme patience will be needed because a trade will need to be confirmed via a bounce, and of course chasing the market all the way up here is a great way to lose money. Unfortunately, there are probably traders who bought this at ¥205, and may find themselves in serious trouble. By being a little bit patient, you can take advantage of what is clearly a shift to the bullish side.

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