GBP/JPY Price Forecast – British pound continues to churn

The British pound rallied a bit during the trading session on Tuesday, crashing back into the ¥138 level. This is an area that continues to be important as it was the 61.8% Fibonacci retracement level. Beyond that, there has been a significant break down there, so I think we will continue to see a lot of pressure in this area in general. Because of this, I’m not looking for this market to rally but I would suggest that the move during the trading session on Tuesday is probably due more to Japanese yen weakness than British pound strength.

GBP/JPY  Video 12.06.19

The reason I say this is that the GBP/USD pair doesn’t look anywhere near as strong as this pair does. This tells me that the overall barometer for the British pound doesn’t suggest real underlying strength. After all, you measure a currency by its reaction to the US dollar more than anything else. Because of this, I think that although we could rally a bit from here, it’s likely that we will see some type of exhaustion above given enough time. With that in mind, I’m looking for exhaustion near the ¥140 level to start selling if we do get a rally. The alternate scenario of course is that the market simply goes back and forth in this general vicinity, and then eventually breaks down. As a general rule, I believe that once we are below the 61.8% Fibonacci retracement level, it’s very likely that we go down to the 100% Fibonacci retracement level.

Please let us know what you think in the comments below