GBP/JPY Forecast October 18, 2017, Technical Analysis

The British pound fell rather significantly during the Tuesday session against the Japanese yen, reaching below the 148 handle. We did find a bit of support down there though, and it now looks like we are trying to build up enough momentum to continue to go higher. I think that the market will then go looking towards the 149 level as we go back and forth in general. After all, there are a lot of questions when it comes to what’s happening with the United Kingdom and the leaving of the European Union, so obviously there is a lot of volatility and noise when it comes to the British pound in general. Add to that the fact that this pair tends to be rather volatile anyway, and you have a scenario where things could get rather noisy.
I believe in buying dips, but I also recognize that there is a lot in the way of danger when it comes to trading this pair. I think that small positions are probably best played, as I believe that the market will struggle to get above the 150 handle longer-term, but once we do that would be a very bullish sign. Ultimately, this market should have plenty of support, near the 147 level. When you look at the chart, you can see that we are trying to form some type of bullish channel to the upside, but it is very difficult to see an easy trade. I think that short-term trading will probably continue to lead the way, at least until we get some type of clarity when it comes to the British pound in general. If we did break above the 150 level, the market should then go looking towards the 155 level above.