GBP/JPY Forecast July 5, 2017, Technical Analysis

The British pound drifted sideways against the Japanese yen during the session on Tuesday as the 72-hour exponential moving average has offered support. The 146 level will be supportive, and I think it should extend down to the 145 handles. It looks likely that the market will find buyers underneath, so pullbacks offer value that I plan to take advantage of. I believe that the 145-level underneath will offer a “floor” in the market, and I believe that as long as we can stay above that level it’s likely that we will continue to go towards the 150 handle which is my longer-term target.
The alternate scenario
A breakdown below the 145 level would be the alternate scenario, where I would expect the market to go down to the 144 handle, and then eventually go much lower than that, perhaps reaching towards the 140.50 level. This would coincide with the British pound falling apart, and of course a general “risk off” situation would only compound the downward pressure in this market as it is very sensitive to risk appetite worldwide. Stock market selling off will put downward pressure on this market, just as commodities falling apart. Alternately, if they continue to go higher, then the market should go higher in this pair, as risk appetite would be strong. I expect volatility, that is typical in “the Dragon”, but given enough time the choppiness gives plenty of opportunity to take advantage of volatility and give us the ability to make strong profits. I do favor the upside after the recent breakout, so I am more inclined to buy pullbacks that offer value as the pair continues to go back and forth, and over the longer-term gives us the ability to profit drastically from momentum.
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