The British pound initially gapped lower to kick off the week as the fear crept into the markets due to the drone attacks in Saudi Arabia. The disruption of crude oil would of course be very negative for the overall global economy, and that of course has people looking towards the Japanese yen for safety. At this juncture, you can also see that the market is extraordinarily overbought, so therefore it is parabolic. Parabolic markets do pull back, and at this point we are approaching the 38.2% Fibonacci retracement level which is very important. It’s also where the market had recently broken down significantly, so with that and the fact that the candle stick for the week is somewhat of a shooting star suggests that the market rolls over.
GBP/JPY Video 23.09.19
To the downside, the 130 young level would be the initial target, but after that you could be looking at a move towards the lows again. If there is a sudden “risk off” environment, that will more than likely happen. Beyond that though, there is the added concern about the Brexit when it comes to this pair, so keep that in mind as well. This pair could fall simply because the British pound is attached to it and not as much of a global economy reaction. If we get bad news on both fronts, the move could be quite quick and brutal. As far as buying is concerned, I see a lot of resistance above all the way to at least the 50% Fibonacci retracement level.
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This article was originally posted on FX Empire
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