GBP/JPY Forecast May 17, 2017, Technical Analysis

The GBP/JPY pair initially tried to rally on Tuesday but found the 147 level to be too exhaustive. Because of this, looks like we are going to bounce around between the 147 level on the top, and the 146 level on the bottom. If we break down below the 145.75 level, then I think the market will probably go fishing towards the 145 handle. Remember that this pair is highly sensitive to risk appetite, and will follow stock markets most of the time. The day was initially very negative for stock markets, but turned around to show signs of support as the Americans picked up the marketplaces. Because of this, I think that the market may stay in this consolidation area in the short term.

Longer-term outlook

I believe that the longer-term outlook for this pair is bullish, but a little bit of volatility and perhaps even backfilling will be needed to take advantage of what has been a very impulsive moved to the upside. Ultimately, I think that the 150 handle is a bit too enticing to ignore, and that the market participants are going to be aiming for that level. Even if we break down to the 145 handle, I still think that there are enough buyers in this market that will ultimately be bullish and looking for a move to that high number. If we break down below the 145 handle significantly, that could signal a change in the marketplace, but currently I still am bullish and don’t see that changing in the near term. In general, most of the yen related pairs look like they are picking up support later in the day, and they tended move in the same overall direction over the longer term. This pair does tend to be a bit more volatile however.
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