The British pound broke down a bit during the trading session on Tuesday, as we have sliced through the psychologically important ¥135 level. By doing so, that sets up a move to the downside that could wipe out the entirety of the rally that is now being decimated. That means we could go as low as ¥131.50, perhaps even lower than that.
GBP/JPY Video 17.07.19
Short-term rallies should continue to offer resistance, and therefore I would not be interested in buying this pair anytime soon. Quite frankly, we have just broken out of what looked like was going to be a consolidation area, so that shows further weakness. This seems to be more or less a move in the British pound overall as we continue to see problems going forward with the Brexit and the likelihood of a “no deal Brexit” could come into play.
Ultimately, this is a massive downtrend and that doesn’t seem to be changing anytime soon, so at this point I think all you can do is wait for selling opportunities. I have no interest in trying to fight this market and try to catch a “falling knife.” This market should see a lot of support at the ¥131.50 level, which of course is the 100% Fibonacci retracement level. I could see some type of bounce from there that we can take advantage of, but in the meantime all you can do a short this market in this type of environment.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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