GBP/JPY Forecast October 30, 2017, Technical Analysis

The British pound fell during the day on Friday, reaching down towards the 149 handle. That’s an area that has offered a bit of support, and we have not only bounced from there early in the day, but we also turned around to test that area again. Ultimately, the 150 level above is resistive, but if we can break above there again, then I would become aggressively bullish in a market that has a certain amount of risk component build into it. Alternately, if we break down below the 149 handle, we probably go looking towards the 148 handle next. This is a market that needs to pull back a little bit, and I think that the British pound is getting beaten up a little bit against most currencies, but this could be a short-term phenomenon.
Pay attention to the stock markets in the commodity markets, because of it becomes a “risk off” market, this pair will pull back. Alternately, if those market start to rally again, that could help this pair as people in the currency market will then go seeking larger returns via the carry trade. Ultimately, this is a market that I think will go higher, but there will be the occasional setback like we have seen. Small position sizing is probably the most important part, so having said that I think that the market is probably one you want to add to win trades move in your direction. I’m willing to go in either direction for the next 100 pips, but I recognize that the move above 150 probably represents more of a sustainable longer-term move than the breakdown from here. Either way, caution is going to be paramount for this market, as it looks likely to be very noisy over the next several sessions.