GBP/JPY Price Forecast – British Pound Pulls Back From Crucial Resistance Barrier

The British pound initially tried to rally during the trading session on Wednesday but gave back the gains near ¥152.50, an area that has been important several times as of late. The market pulling back the way it has should not be a huge surprise, because quite frankly the ¥152.50 level has offered a top to a consolidation area that we have been in for a while. Underneath, we have the ¥150 level that extends down to the ¥149 level.

GBP/JPY Video 07.10.21

If we were to break down below the ¥149 level, then the market is likely to go looking towards the ¥145 level, possibly even the ¥140 level after that. At this point in time, the market continues to look very noisy, but that should not be a huge surprise due to the fact that there is a high correlation between risk appetite and this currency pair. After all, the market will continue to see money jumping towards the Japanese yen in any type of “risk off” situation.

At this point, it looks like we are forming a huge topping pattern, so that is something worth following, as if we break down below the ¥149 level, I suspect it will be a bit of a “trapdoor opening” for a move much lower. In fact, I believe that people will be flooding into the Japanese yen at that point in time. There are plenty of reasons out there to think that there would be a sudden “risk off move”, so this would not surprise me and therefore it is essentially what I am looking for this market to do over the longer term. That being said, if we were to break above the ¥153 level, then the market is likely to go looking towards the ¥155 level.

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