GBP/JPY Forecast June 13, 2017, Technical Analysis

The British pound initially went sideways during the session on Monday, and then collapsed. We had broken down below the 140 level significantly, and it now looks as if the British pound is going to continue to struggle against most currencies, and of course the Japanese yen will be any different. This is a bit of a hangover from the election results, and of course the uncertainty that we will see in the United Kingdom as far as the government is concerned. Because of this, I believe that short-term rallies are selling opportunities in a market that certainly looks very bearish. Having said all of that, there is a significant gap above that has not been filled. However, I do not think that the market is ready to do anything like that.
Selling rallies
I believe that selling rallies will continue to attract volume, as the British pound is an easy currency to beat up on right now due to the surprise election results. The trading community overall seems to have very little appetite for the Pound in general, so it makes sense that they would run to a safety currencies such as the Japanese yen. I believe that the market will need to break above the 140 level to have the rallies taken seriously. I do recognize that we got a little bit overextended during the day to the downside, but that should only offer value in the Japanese yen going forward when we do bounce. I believe that the target going forward is the 138 handle, and then perhaps even lower than that depending on what happens next. Regardless, the one thing you can always count on in this pair will be volatility, and that certainly will be any different today.