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GBP/JPY Price Forecast – British pound chops against Japanese yen

The British pound gapped lower during the open on Monday, only to turn around and fill that gap. At this point, it’s interesting to see whether or not the market can continue to go to the upside, or will it simply roll over as the moving average suggests?
Christopher Lewis
GBP/JPY daily chart, October 08, 2019

The British pound gapped lower to kick off the trading session on Monday, but then turned around to fill that gap. The confusion that the market has seen over the last couple of days makes quite a bit of sense, as this pair is so highly sensitive to risk appetite. Ultimately, this is a market that will continue to show signs of choppiness as we have a lot of different geopolitical concerns and trade issues out there. Beyond that, we also have Brexit when it comes to this pair as well, so this is an especially sensitive Japanese yen pair.

GBP/JPY  Video 08.10.19

To the downside, the market could go looking towards the ¥130 level, and with the 50 day EMA above offering such a significant psychological and structural resistance, we could find a reason to get down there. Quite frankly, we are only one headline away from seeing this market role right back over again, or for that matter rally. If we were to rally than I suspect that the ¥135 level above will be difficult to break through. All things being equal, this is a market that is probably going to remain very difficult to hang onto, as it tends to be very volatile under the best of circumstances. In this current environment, things can only get worse would be my suspicion. Position sizing will be crucial when it comes to trading “The Dragon”, as when it finally makes its move it will probably be sudden and quite brutal.

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