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Christopher Lewis
GBP/JPY daily chart, May 29, 2019

The British pound went back and forth against the Japanese yen during trading on Tuesday, which is a relatively strong sign considering that we form a couple of inverted hammer candlesticks. However, we have not broken above them so they are still very much in play. With this leads me to believe is that we will continue to see sellers on short-term rallies but the fact that we have not belted down and certainly at reason up to based upon technicals is a good sign.

GBP/JPY  Video 29.05.19

Ultimately, I think if we break down below the bottom of the trading session for Tuesday, we probably go looking towards the ¥135 level. On the other hand, we break above the inverted hammer from the last couple of sessions, probably go looking towards the ¥141 level. At this point, the downside is still favored but the action on Tuesday certainly gives the buyers some hope.

Remember, this is a pair that is highly sensitive to risk appetite and global trade. In other words, there are plenty of reasons outside of the Brexit to sink this market. Obviously though, the Brexit headlines get worse that will make the British pound fall as well. All things being equal, it is probably still a selling opportunity more than anything else but I do recognize that eventually the British pound becomes cheap enough that people start buying based upon value. Expect volatility but look for value on signs of exhaustion using short-term charts to pick up Japanese yen.

Please let us know what you think in the comments below

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