The British pound initially tried to rally during the week but then fell over to reach down towards the ¥131.50 level. At this point, the market is likely to continue to go lower, based upon the longer-term downtrend, the shooting star from a couple of weeks ago, which of course is sitting at the 38.2% Fibonacci retracement level. The market has been negative for some time, and the fact that the geopolitical concerns around the world continue to cause issues, leads me to believe that we will continue to drop from here. The ¥130 level is a major target, an area that could cause significant support as it was previous resistance shown by a couple of shooting stars.
GBP/JPY Video 07.10.19
To the upside, the ¥135 level should offer a significant barrier of resistance. If we were to break above the shooting star from a couple of weeks ago, that would be a major turn of events but right now it still looks very likely to favor the downside as Brexit causes issues, and of course there are plenty of problems out there to keep traders concerned about the overall risk appetite. Ultimately, it is not until Brexit is solved that this pair will be able to take off to the upside for a sustained move. Because of this I remain bearish and have no interest in trying to fight what I see as an extraordinarily strong trend. Ultimately, this is a market that I fade rallies in but tend to focus more on short-term charts.
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This article was originally posted on FX Empire
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