GBP/JPY Weekly Price Forecast – British Pound SkyrocketsThe British pound skyrocketed during the week on trade hopes involving the Brexit situation. As we are starting to see signs of progress in those negotiations. However, we have not seen a true decision made, so a lot of this could be a simple short covering.
The British pound has rallied significantly during the week, breaking above the ¥135 level, an area that also features the 38.2% Fibonacci retracement level and a shooting star on the weekly chart that led to the last selloff. At this point, officials are saying very little as far as concrete details are concerned but they are tweeting. With that, this market could be disappointed, and if it is you can anticipate that the selloff will be brutal. After all, between Thursday and Friday, the market had rallied about 750 pips. That is far too much in a short amount of time to be sustainable.
GBP/JPY Video 14.10.19
Looking at the candle stick though; it does show that the market is ready to turn around. If it does pull back on a shorter timeframe and find support at the ¥135 level, then it could be a nice buying opportunity for a longer-term play. However, this truly doesn’t happen until Brexit is completely solved. At this point, we are already starting to see Boris Johnson walked back expectations slightly, so I do think that disappointment could be coming. However, price is king, so therefore we need to respect the upward momentum. Longer-term traders should be looking for pullbacks on daily charts if we get that negotiated settlement. At that point, then the market is more than likely going to go looking towards the ¥150 level, possibly even the ¥163 level. If we don’t get that deal and they disappoint people yet again, you can count on losing 300 pips immediately.
Please let us know what you think in the comments below