The British pound initially tried to rally during the trading session on Tuesday but gave back quite a bit of the gains as we turned around and sold off. At this point, the market looks likely to break down towards the ¥141 level, and then possibly the ¥140 level. This is a marketplace that is very risk sensitive, so keep that in mind. After the bloodbath on Wall Street during the previous session, it would not be surprising at all to see people be a bit skittish about going long.
GBP/JPY Video 15.05.19
If we do break down to the ¥140 level, that’s a 50% Fibonacci retracement level from the absolute bottom, and I expect to see quite a bit of support in that area. At that point, I would anticipate a bit of a bounce. That being said, we are starting to see poor economic numbers in general, and with the US/China trade war going on, it’s not a big surprise that we would struggle overall. The Japanese yen of course is a safety currency, and with the Brexit going on, it just makes sense that this pair may continue to struggle a bit. All things being equal though, if we do break above the ¥142.50 level, that would be a strong move and could send this market looking towards the ¥144.50 level, possibly even the ¥145 handle. All signs point to lower pricing though, so I am much more comfortable shorting at this point that I am buying. Longer-term, there will be value hunters below and of course ¥140 could be that level.
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This article was originally posted on FX Empire
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