GBP/JPY Price Forecast – British Pound Trying to Recover

The British pound has rallied a bit against the Japanese yen early on Monday in order to trying to wipe out a lot of the losses from last week. Most of those losses came in the form of a rather ugly candlestick on Friday, so at the end of the day that could have been significant profit-taking as we are trying to break above a large, round, psychologically significant figure in the form of the ¥140 level. If we can get above there, this market could take off quite drastically and perhaps even go looking towards the ¥142.50 level, followed by the ¥145 level. This takes a bit of “risk on” type of attitude, but clearly the markets ready to do that on the first hint of good news.

GBP/JPY Video 25.08.20

To the downside, I believe that the ¥138 level continues to offer significant support, so a break down below there would be a little bit of a surprise. Underneath there, I would anticipate that the 50 day EMA comes into play, and perhaps even more structurally important, the ¥136 level. Either way, I like the idea of buying dips still, at least until we break down below the ¥138 level. I do think that eventually we can break out to the upside, but the question is whether or not we need to pull back significantly to build up the momentum, or can we just grind sideways and eventually accomplish this? At this point, that is really the only question I am asking myself when I look at these charts.

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