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Christopher Lewis
GBP/JPY daily chart, October 31, 2019

The British pound has gone back and forth during the session on Wednesday, as we continue to dance around the ¥140 level. This pair is highly sensitive to risk appetite, so keep in mind that the gyrations of the global financial system will continue to weigh upon this market, and perhaps send it higher or lower. It does tend to rise in good times and fallen bad. However, we also have the wrinkle of Brexit continuing, and at this point it is on the back burner, at least for the next couple of months as the European Union offered a 90 day extension.

GBP/JPY  Video 31.10.19

To the downside, the market is supported by the 200 day EMA underneath, and of course the ¥135 level from a structural standpoint. Overall, very likely that the market should continue to see buyers on these dips, as the British pound is undervalued from a historical standpoint. Beyond that, if you look at the flag pattern that is trying to form, we could be looking at another 1000 pips higher, sending this market closer to the 100% Fibonacci retracement level which is at the ¥149 level, possibly even the ¥150 level depending on when and where the flag kicks off.

I have no interest in shorting this market, because quite frankly it continues to defy gravity, and therefore fighting the market makes very little sense at this point. I look at pullbacks as potential buying opportunities, as we have obviously tried to change the overall long-term trend in this marketplace.

Please let us know what you think in the comments below

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