GBP/JPY Weekly Price Forecast – British pound breaks down during the week only to rebound again

The British pound broke down rather significantly during the week, and the “flash crash” during the week of course was a major contributor to this. That being said, there’s been a lot of technical damage so I would pay attention.
Christopher Lewis
GBP/JPY weekly chart, January 07, 2019

The British pound has broken down significantly against the Japanese yen during the week, slicing through the bottom of the descending channel that we had been in for so long. Because of this, I think we have done a significant amount of technical damage, and therefore I think it makes sense that we will eventually see selling jump back in. I do believe that the ¥140 level above will be massive resistance, so if we were to break above it this could negate the downtrend channel given enough time.

GBP/JPY  Video 07.01.19

I think the volatility will continue, because quite frankly we have so much in the way of headline risk out there that it’s only a matter of time before the sellers get involved and pummel this pair again. This has been an extraordinarily difficult week, but the lack of liquidity certainly wasn’t helping either as we had New Year’s Day. Ultimately, I think the sellers have made a statement and if you are patient enough, you should get an opportunity to short this pair again. If we break above the ¥140 level, then we could see a move towards the ¥145 level after that. I think this is going to come down to the US/China trade relations, which of course will be meeting up rather soon. Beyond that, we have the Brexit so if this pair rally significantly because of the US/China talks going well, the real plate would probably be to buy the AUD/JPY pair because of the overhang of the Brexit in this one.

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