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Christopher Lewis
GBP/JPY

The British pound has gone back and forth during the trading session on Monday as we continue to dance around the 50 day EMA and the 200 day EMA. After all, this is a market that simply is going nowhere, and has formed a bit of a neutral candlestick. In other words, we have nowhere to be, perhaps nowhere to go. The ¥135 level underneath should be massive support, just as the ¥138 level is resistance. All things being equal, the market will probably stay in this range, as the world waits for results involving the Brexit situation and of course the US elections. In other words, were simply held hostage.

GBP/JPY Video 27.10.20

It is difficult to imagine that we suddenly take off to the upside, but if we get some type of resolution to Brexit that might be the easiest course of action. However, if we get some type of major “risk off scenario”, perhaps as a significant push towards a “no deal Brexit”, we could break down below the ¥135 level. All things being equal, the market is likely to see noisy trading more than anything else. Overall, the market is probably best trade from a short-term perspective and back and forth, but with small positions as this pair can suddenly take off.

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To the downside, we could go down to the ¥133 level rather quickly, as that was the most recent low. Breaking down below there could open up even further losses. To the upside, I believe that the ¥140 level is going to be very difficult to break out above anytime soon.

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