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Christopher Lewis
GBP/JPY daily chart, October 03, 2019
Japanese ten thousand yen banknote

The British pound broke down a bit during the trading session on Wednesday against the Japanese yen as we are below the 50 day EMA. By doing so, it looks as if we may try to continue to drag this market down, but at the end of the day we still see quite a bit of order flow in this general vicinity and of course the Brexit headlines can jump in and cause issues at any moment. Because of this, position size should be adjusted accordingly, perhaps keeping half of the normal position that you would under typical circumstances. As we approach the October 31 deadline, things could get ugly in one direction or the other so please keep that in mind.

GBP/JPY  Video 03.10.19

If we break down below the lows on the Wednesday session, it’s very likely that we will continue to go looking towards the ¥130 level. At this point, that’s my default scenario but I also recognize that if we recapture the 50 day EMA which is just above the candle stick for the day, that could send this market looking towards the ¥133.25 level, perhaps breaking out above there and reaching towards the ¥135 level which should be even more resistive. Although we have had a nice bounce recently, keep in mind that the longer-term trend is still to the downside and there certainly are a lot of things out there that could cause a major “risk off” trade which would drive this pair lower anyway.

Please let us know what you think in the comments below

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