GBP/JPY Forecast May 31, 2017, Technical Analysis

The British pound initially fell during the Tuesday session, but bounce significantly from the 141.80 level to reach all the way to the 143 handle. A break above the daily highs should send this market much higher, perhaps as high as 144 without too many issues. The British pound in general of course has seen a significant amount of reversal during the day, as the GBP/USD pair also showed signs of life suddenly. A lot of this would be a correction of the oversold condition that the British pound found itself and after the election polls came out much tighter than anticipated last week, but over the weekend have seen numbers move back in favor of the conservative government. Because of this, I believe it’s only a matter of time before the uptrend continues, and therefore I do like buying on a break above the highest for the day.
Very risk sensitive
Keep in mind that these pairs, Japanese yen related ones, tend to be very risk sensitive. This is probably one of the most risk sensitive pairs, so having the stock markets rally simultaneously is a huge help for this market which can move 100 pips in the blink of an eye. Alternately, if we break down below the 142.50 level, we could find the market reaching towards the 142 handle again rather quickly. The daily candle is starting to look rather bullish, so I do think that the buyers are coming back, but waiting for the market to tell you it’s time to start buying is the best way to play this pair as it can move so rapidly. Smaller position size may be the best way to play this market as it will protect your account through massive volatility.