GBP/JPY Forecast October 3, 2017, Technical Analysis

The British pound fell precipitously against the Japanese yen at the open on Monday, reaching well below the 150 level, which is an area that of course has a certain amount psychological importance. By doing so, we are testing lows, but I think if we can bounce from here and back above the 150 handle, that’s a very bullish sign as the British pound should continue to find resiliency. I think that the British pound has been a bit oversold anyway, and of course this has a lot to do with a “risk on/risk off” trade. If we get that trade, then the market should go towards the 151 handle, and perhaps beyond. I don’t like shorting until we can break down below the 148.50 level, which is the bottom of this support area.
I do like buying this pair, but now for me it’s just a question of whether I do it here, or it lower levels. Quite frankly, I look at it is this is offering value, which of course is something that we want to take advantage of. If stock markets rally, that’s a good sign and it should continue to push this market to the upside. On the other hand, if they do melt down, then there’s no point in trying to go along. Pay attention to the overall risk appetite of the marketplace, it will give us an idea as to where to go next. I think that the market should find buyers though, based upon the algorithmic trading that we have seen as of late. I think that the market continues to favor the upside longer-term, but certainly has a lot to think about in the short term. If we did break down below 148.50, then I think we fall rather quickly to 145.

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