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Christopher Lewis
GBP/JPY daily chart, June 04, 2019

The British pound initially tried to rally during the trading session on Monday, but as you can see gave back quite a bit of the gains. By doing so it looks as if the market is ready to drift lower, and now that we are well below the 61.8% Fibonacci retracement level, it’s quite common to wipe out the entire move down to the 100% Fibonacci retracement level. I believe that the market will continue to struggle overall, because quite frankly the risk appetite isn’t going to help.

GBP/JPY  Video 04.06.19

Rallies at this point will struggle all the way to the ¥138 level, so it’s not until we wipe out the Friday candlestick that I’m interested in buying. I anticipate that we will continue to see a lot of weakness here, because not only is the global economic situation dicey, but we also have to worry about the Brexit. Neither of those are going to lift the British pound against much, although I’d be the first to admit that we are definitely oversold at this point.

If we did somehow break above the ¥138 level, then the market probably goes looking towards the ¥141 level. Ultimately though, I suspect there’s probably about a 20% chance of that happening, and probably only if we get some type of announcement coming out of London or Brussels that affects the bridge pound specifically in the form of the Brexit. Global risk appetite is definitely on its back heels.

Please let us know what you think in the comments below

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