GBP/JPY Weekly Price Forecast – British pound testing major supportThe British pound is testing major support against the Japanese yen, in the form of the ¥140 level. This is a market that reacts to the global markets overall, and of course the general feeling of risk appetite.
The British pound has gone back and forth during the week, testing the ¥140 level, an area that has been important more than once. There is a “lower low” on this chart based upon this last candle stick, and I would also point out that the MACD is diverging, so we may get a bit of a bounce in the short term. I think that the market will probably offer a selling opportunity above, especially near the ¥142.50 level, perhaps even the ¥145 level.
GBP/JPY Video 31.12.18
The alternate scenario of course is that we break down through that anterior downtrend line that I have drawn, and we could then go down to the ¥138 level. Regardless, I think that the Japanese yen will probably strengthen a bit early next year, because there are so many reasons to think that the global economy may slow down and of course the volatility that we have seen in various places like the stock markets isn’t going to hell. Beyond that, the Brexit is a major issue to overcome, and ultimately I think that we still have more pain to feel for the British pound, and once we start to focus on the Brexit again and not so much the volatility in the stock markets, I think you will see a lot of negativity directed at Sterling. Look for a bounce in signs of exhaustion to start selling again, or a break below that anterior trendline as both are a reasonable signal. That being said though, we’ve had so many negative candles in a row that a bounce makes quite a bit of sense.