GBP/JPY Price Forecast – market continues to consolidate at low levels

The British pound has gone back and forth against the Japanese yen during trading on Tuesday, breaking below the bottom of the shooting star from the Monday session. While this is a negative sign, the reality is that we are in consolidation more than anything else.
Christopher Lewis
GBP/JPY daily chart, June 26, 2019

The British pound fell a bit during the trading session on Tuesday but still remains somewhat supported just below. At this point, it’s very likely that the market will continue to be very choppy, and of course supported at the psychologically important ¥135 level underneath. That being said, it’s likely that the market will continue to focus on risk appetite around the world, and of course the Brexit. Both of those things could cause this market to be erratic and crazy, but at this point we are a bit overextended. Overall, this is a market that probably offers opportunities to sell short-term rallies that show signs of exhaustion.

GBP/JPY Video 26.06.19

If we do break down below the ¥135 level, it’s likely that the market could unwind down to the ¥132.50 level, and then possibly the ¥130 level given enough time. This would obviously be an acceleration of negativity, so therefore it makes no sense to jump “all in”, as the market has been so erratic. This would be especially true on rallies, unless of course somehow we get a solution to the Brexit or the US/China trade relations, neither of which look likely in the short term. Quite frankly, the higher this pair goes, the more likely I am to be looking to sell it as we have broken down below the 61.8% Fibonacci retracement level which is almost always a sign that we are going to wipe out the entire upward move. This is a longer-term call, but one that typically works out.

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