GBP/JPY Price Forecast – British pound falls for Tuesday session
The British pound has broken down significantly during the trading session on Tuesday, reaching towards the ¥135 level underneath. This is an area that obviously is a large, round, psychologically significant figure, and could be the beginning of a bottoming pattern. However, if we close below the ¥135 level, we almost certainly will wipe out the entire move higher that extends down to the ¥131.50 level.
GBP/JPY Video 10.07.19
The alternate scenario is that we bounce from here, perhaps trying to recapture the overall consolidation area that we have been carving out. You can see that I have a pink box on the chart suggesting that we could reach towards the ¥138 level again, but I still believe that it’s easier to short this market on signs of exhaustion. Beyond that, if we do move towards that area the 50 day EMA will come into view, and that most certainly will attract certain amount of negative technical trading.
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Keep in mind that this pair is highly sensitive to risk appetite, so if stock markets rally, that could be the reason for this pair to bounce. We also have the Brexit, which could throw a lot of issues into the market as well. Obviously, the British pound struggling is a sign that the market is telling the British to get it together and finish their business. It’s been three years, and quite frankly they are no closer to settling the Brexit and people are starting to price in a “no deal Brexit” again.
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