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GBP/JPY Price Forecast – British pound continues to levitate against Japanese yen

The British pound did very little during the trading session on Tuesday, as we continue to hang about where we gapped down to on Monday. With that in mind, it is somewhat impressive but at the end of the day we are overbought.
Christopher Lewis
GBP/JPY daily chart, September 18, 2019

The British pound has gone back and forth during the trading session on Tuesday, as the market continues to deal with the gap lower from the weekend. At this point, the market looks very likely to continue to be a bit erratic, as we are sitting just below the ¥135 level, an area that had seen a massive selloff previously. The fact that we have done that tells me that we are going to do one of two things in the short term: we will either break down or are we will grind sideways and try to digest the overbought conditions.

GBP/JPY  Video 18.09.19

Looking at the chart, if we were to break above the ¥135.50 level, then it’s very likely that the market could go much higher, perhaps towards the 200 day EMA above which is painted in black and currently hanging about the ¥138 level. Also of interest in that area is the fact that there is the 50% Fibonacci retracement level which of course attracts a lot of attention in and of itself. While I do recognize that the British pound has been rather explosive as of late, the reality is that this pair is highly sensitive to risk appetite and it’s very likely that the markets will have something to worry about soon enough to send this market back down. If we were to break down below the lows of the Monday session I would assume that the market would eventually try to take out the Friday candlestick, and then perhaps reach down towards the ¥132 level.

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