GBP/JPY Weekly Price Forecast – British pound forms a hammer

The British pound has recently found a bit of a bottom at the ¥135 level, which of course is a very bullish sign. However, I think a lot of this comes down to the lack of Brexit headlines more than anything else. If the hammer from the previous week can be trusted, it’s very likely that we are going to see a bit of a bounce here. I don’t know that we can break out for a longer-term move, but if we can break above the ¥138 level it does open the door to the ¥140 level. Perhaps this is just a function of being oversold?

GBP/JPY  Video 01.07.19

Obviously, if we break down below the ¥135 level that would be extraordinarily negative. We are below the 61.8% Fibonacci retracement level and that typically does mean that you wipe out the entire move. However, we are not in normal times right now so you can’t necessarily count on those types of things. A lot of the next move will probably come down to the US/China trade discussions over the weekend at the G 20, so keep that in mind. The gap higher or lower on Monday will determine which direction we go is my best guess.

That being said, if we were to break down to the lower side, and break the back of these couple of candlesticks, that would be extraordinarily negative. At that point I would become aggressively short as it would be the beginning of a serious break down. However, to the upside I think it’s more of a “slow and steady” situation.

Please let us know what you think in the comments below