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Christopher Lewis
GBP/JPY daily chart, June 05, 2019

The British pound looks as if it is going to rally a bit against the Japanese yen, but at this point in time I think that the 61.8% Fibonacci retracement level is the gateway to much lower pricing, and the fact that we had not only closed below it but close below it rather significantly is a huge sign. The ¥138 level coincides with the 61.8% Fibonacci retracement level, and the fact that we had broken below there was such a nasty daily candle stick tells me that a lot of the support has been crushed.

GBP/JPY  Video 05.06.19

At this point, it’s very likely that we could bounce towards the ¥138 level again, but I would expect to see a lot of resistance there. The fact that we have broken through the 61.8% Fibonacci retracement level typically means that we could go looking towards the 100% Fibonacci retracement level. This makes a lot of sense, as the British pound is still susceptible to problems with the Brexit, which seems almost never-ending. Beyond that, this is a pair that is highly sensitive to global risk appetite, which is in the tank at the moment. Even if we did break above the ¥138 level, it’s very likely that we could see the ¥140 level offer a significant amount of resistance. It’s not until we break above that level that I would consider buying this market. Currently, I think this is a market that is oversold, just as the stock markets are in the short term. All of that taken into account, it’s obvious that negativity still reigns supreme.

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