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Christopher Lewis
GBP/JPY daily chart, October 17, 2019
Five pounds

The British pound has gone back and forth during the trading session on Wednesday again as we continue to see the 200 day moving average have an effect. After all, we did pull back towards that area and bounce. That of course is a good sign but at the same time the ¥140 level has offered resistance. Quite frankly, this is a very strong trend change, but at this point you would be “chasing the trade”, which of course is best way to lose money in this type of environment. After all, jumping in and buying now would be about 900 pips after it started.

GBP/JPY  Video 17.10.19

If the market did break above the ¥140 level, that would obviously be a sign that the market should go higher, perhaps reaching towards the ¥145 level. A break down below the 200 day EMA could open the door for the market back to ¥135, possibly even lower than that if we get enough bad news. After all, the British pound is dealing with Brexit, but at the same time the Japanese yen is considered to be a safety currency so if a lot of negative headlines come out, it’s very likely that we will see the market fall on negative geopolitical headlines as well as economic ones. All things being equal, this is a market that is overextended so even if you were to start buying it, you need it to pullback in order to find value.

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