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Christopher Lewis
GBP/JPY daily chart, December 26, 2018

The British pound rallied a bit initially during the trading session on Monday but then rolled over to show signs of weakness again. The ¥140 level should be supportive, based upon previous action, and of course the fact that it is a large come around, psychologically significant figure. I do think that we could get a bit of a bounce from here in the short term though, and that could offer a nice opportunity to short this pair again. However, if we break down below the ¥140 level, that probably since this market looking towards the ¥138 level next.

GBP/JPY  Video 26.12.18

The pair is highly sensitive to risk appetite globally, and with stock markets around the world getting hammered, it makes sense that we will continue to see negativity over here. I believe that the ¥145 level above is the current “ceiling” in the market, backed up by the 200 day EMA just above that level. I believe in fading rallies and think that we will get plenty of opportunities to short this pair on these bounces. In fact, I have no scenario in which a willing to buy this pair unless of course there is some type of Brexit agreement signed, because we have the “double whammy” of the Japanese yen being a safety currency, while the British pound of course is shunned because of all of the drama around the Brexit. If you are patient enough, you should get a nice exhaustive candle to take advantage of and start selling again.

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