GBP/JPY Price Forecast – British pound bounces from 50 day EMA

The British pound initially fell during trading on Friday breaking below the 50 day EMA against the Japanese yen but has turned around of form a nice-looking hammer. By doing so, the market looks as if it is ready to bounce again, perhaps reaching towards the ¥135 level above which was so resistive. With that, the market continues to be very choppy and therefore very sloppy. However, I suspect that in the short term we will get a little bit of a bounce, followed by a massive amount of resistance at the ¥135 level which is not only a large, round, psychologically significant figure but it is also the 38.2% Fibonacci retracement level.

GBP/JPY  Video 30.09.19

With all of that being said, if we turn around to break down below the lows of both Thursday and Friday, that could open up the door down to the ¥130 level which is where we had broken out above to get to this level to begin with. Quite frankly, this is a market that is going to continue to be difficult because it is wrist sensitive and that of course is sensitive to the Brexit which is nothing short of a mess. At this point, if you are to trade this pair, you need to trade with small size, and therefore with the large and wide stops. Trying to trade this market with a lower leverage will be a great way to lose money in this environment.

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