The British pound tested the ¥130 level for the week, and then broke down significantly. The fact that it did do so suggests that we are ready to go much lower. Ultimately, we are hovering around the ¥127.50 level, but I think what we are looking at next is a move towards the ¥125 level. That’s an area that should attract a lot of attention, as it is a large, round, psychologically significant figure. Short-term rallies at this point will be selling opportunities and although we are speaking of the weekly chart here, I would suggest using daily candlesticks as an entry as it allows you to fine tune those trades.
GBP/JPY Video 12.08.19
To the upside I see not only the 130 and level as a major resistance barrier, but I also think that the ¥135 level will be massive in its implications. It’s not until we break above there that I think longer-term traders are comfortable buying. Beyond all of that, we have a lot of trouble involving the Brexit and of course we are nowhere near some type of deal. If that’s going to be the case it makes perfect sense that the British pound falls. Furthermore, we have the geopolitical situation, which is good, and of course we have a lot of trouble when it comes to global growth. That is a bit of a perfect scenario for this pair to continue to go lower as people look for the safety of the Japanese yen over such an uncertain currency.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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