GBP/JPY Weekly Price Forecast – British pound continues to struggle against Japanese yen
The British pound initially tried to rally during the week but gave back the gains and ended up forming a candlestick that looks very much like a shooting star at the bottom of the overall range. By sitting on top of the ¥140 level, this has me thinking that we may break through. If we do, then I think the next logical target would be the ¥137 level, which is the 61.8% Fibonacci retracement as marked upon the chart. ¥140 of course is a large, round, psychological number that people will pay attention to, but quite frankly in a risk off environment, it makes a lot of sense this pair would continue to drop.
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The alternate scenario of course is that we break above the top of the shooting star which would be very positive sign, perhaps sending the market back to the ¥145 level. I think it’s good to be difficult to trade this market with large amounts of capital, because it’s so headlined sensitive, and let’s face it at this point headlines are driving the markets in general. Overall, I believe that we will continue to see noisy trading action, but we should also have the ability to take advantage of a longer-term opportunity as soon as we get an impulsive candle in either direction. This is typically a somewhat quiet time of year, so range bound short-term trading is also very possible.