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GBP/JPY Price Forecast – British pound treads water at major figure

The British pound has continued to hover around the ¥135 level ahead of the FOMC Meeting, interest rate decision, and of course the statement. With that being said though, there is a lot of noise just above that I am paying attention to.
Christopher Lewis
GBP/JPY daily chart, September 19, 2019

The British pound has seen a nice shot higher over the last couple of weeks, but quite frankly has no business doing so for anything more than a “dead cat bounce.” The ¥135 level was the scene of a major selloff as of late, and is also the 38.2% Fibonacci retracement level as seen on the chart. That being the case I think it’s only a matter time before sellers come back and I would also point out that the 200 day EMA is close to the 50% Vedanta retracement level at the ¥137.50 level as well. In other words, there is a lot for the market to overcome in order for it to go higher.

GBP/JPY  Video 19.09.19

A revisit of the downside makes quite a bit of sense considering that the Brexit is of course still going to cause a lot of issues, and therefore it’s very likely that we will eventually roll over. However, in the short term it does look like the market is going to press the issue, perhaps trying to test out all of the noise just above. The 50% Fibonacci retracement level being broken to the upside, and perhaps even more crucially the 200 day EMA, could send this market much lower, perhaps giving a bit of a reprieve for the market to go all the way to the 140 young level. All things been equal though, I am looking to fade any rally that I see in this market from a longer-term perspective, but we don’t have the set up yet.

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