GBP/JPY Price Forecast – British pound finds strength on Thursday

The British pound initially fell during the trading session on Thursday, reaching down towards the ¥135 level. This is an area that of course is a large, round, psychologically significant figure, and therefore it will attract a lot of attention. The reaction has been rather strong during the trading session, but we need to break above the inverted hammer that formed during the trading session on Wednesday to get more momentum to the upside. If we get that, the market then probably goes to the ¥138 level, or at least the 50 day EMA which is painted in red on the chart.

GBP/JPY  Video 12.07.19

To the downside, if we were going to break down below the ¥135 level, then the market probably goes down to the ¥131.50 level underneath as it is the bottom of the overall move higher. That would wipe out everything down to the 100% Fibonacci retracement level. We are below the 61.8% Fibonacci retracement level so that typically means that happens, but of course nothing works every time. In the short term, it looks as if we are trying to form some type of consolidation area as denoted on the chart with the pink rectangle. That being said though, once we break out of that area, then we can extrapolate further. If we were to somehow break out of the upside of this pink triangle, then the ¥140 level would be your next target. All things being equal though, I suspect we are just going to grind back and forth.

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