GBP/JPY Forecast October 25, 2017, Technical Analysis

The British pound tried to rally initially during the day on Tuesday, but found the 150 level to be a bit too difficult. We fell significantly from there after forming a hammer on the hourly chart, and then broke down towards the 149.50 level again. It looks as if we are going to continue to drift a bit lower, but I do recognize that there is a lot of support underneath. I suspect that the 149 level will be even more supportive, and although we have broken through the small gap to the downside, I think that it’s only a matter of time before the buyers return. With this being the case, we need more of a “risk on” scenario in the overall market place to have this market go higher, and a break above the 150 level would be rather supportive. I think at that point, a lot of new money would come into the marketplace, trying to take advantage of the momentum that would have returned.
Adding slowly
I believe in adding slowly, because of the volatility that we see in this market. I think that the British pound is getting beaten up a little bit during the day overall, and that of course will show itself in spades when it comes to this pair. If we can continue to see optimism with the British pound though, that should help this market, so pay attention to the GBP/USD pair, because it gives us an idea as to what the British pound is going to do in general. A fresh, new high above the 150.50 level should send this market towards much higher levels, as it would be a sign that momentum is building up and perhaps reaching towards the 152.50 level above.