The British pound initially tried to rally during the trading session on Monday, reaching towards the ¥135 level. By doing so, it looks like that the market is going to continue to drift lower, as the British pound of course is nothing short of toxic at this point. The market is very likely to try to wipe out the entirety of the move, meaning reaching down to the 100% Fibonacci retracement level. That essentially means the ¥131.50 level, and therefore it’s likely that we still have further momentum.
GBP/JPY Video 23.07.19
This pair is very sensitive to risk appetite in general, so if we get some type of major concern when it comes to global markets, this pair of course will sell off. The Japanese yen is considered to be a safety currency, so that would make quite a bit of sense. This is a scenario where I am only selling and not buying, because quite frankly until we get some type of resolution to the Brexit, it’s almost impossible to go long anything involved with the GBP. On the other hand though, if we get some type of major selloff to risk appetite, then it makes sense that the British pound will get absolutely hammered as it not only would be normal to sell this market off, but we also have the enormity of the mass coming out of London. To the upside, even if we did break above the ¥135 level, I think there’s plenty of resistance at the ¥136 level, and then the ¥137.50 level. There’s no need to fight this trend quite yet.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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