GBP/JPY Forecast May 18, 2017, Technical Analysis

The British pound fell significantly during the day on Wednesday, slicing through the 145 handle. That is an area that of course would attract a lot of attention as it is a large, round, psychologically significant number. This was in reaction to a general “risk off” session that was featured during the day due to the concerns of the president speaking to Russian officials, and perhaps leaking some type of intelligence. However, there are no definite in this case, and now it appears that the market has possibly overreacted. However, this currency pair tends to be extraordinarily sensitive to risk appetite around the world, and as we saw a bit of a panic it made sense that this pair fell.

The alternate case

If we can break above the 145 handle, that would not only be psychologically important, but it would break above the top of a shooting star that formed late in the day suggesting that there was going to be more bearish pressure forward. The 144 handle currently seems as if it is trying to offer support, and that could be the beginning of some type of accumulation. However, I’m certainly not willing to step in front of that moving train until we break above the 145 handle, which would be a very strong sign. Alternately, if we break down below the 144 handle, we will probably continue to drop, and I suspect that the 142 handle below would be a nice target over the next several sessions. However, this is a market that is prone to being sensitive to sudden headlines, and therefore you will have to make sure your stops are set at appropriate levels in a market that can rip in one direction or another at a moment’s notice.
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