GBP/JPY Forecast May 19, 2017, Technical Analysis

The GBP/JPY pair initially rallied during the day on Thursday, but found enough resistance near the 144.80 level to roll over several times. It looks as if we are trying to consolidate, and that typically means more of the same. After the massive selloff, the market took a little bit of a breather during the day but I think it looks suspicious that although we did breakdown, we didn’t find people jumping into the markets to pick up value either. Because of this, I think that the risk is still probably to the downside, as it will only take an errant headline or 2 to get the market skittish again, which of course works against the value of this pair. That’s the case, I would have to think that the market is probably going to go looking for the 143.50 region which was the low. A breakdown below there probably has the market going towards the 143 handle.

Risk on/risk off

Remember that the pair tends to be a risk on/risk off type of situation, so pay attention to the stock markets. Although they did rally a little bit during the day based upon value hunting, the reality is that there is still a lot of concern out there over the Washington DC issue, and of course the thought that perhaps the market is a bit overbought. Because of this, I am a bit hesitant to start buying and will have to see a longer-term candle to suggest that I should be doing that. Right now, we don’t have that so I must believe that the next move is more than likely going to be to the downside although the “easy money” has already been made shorting this market. Buying a supportive candle on the daily chart might be a way to go, but it’s going to take quite a bit of nerve.