GBP/JPY Forecast October 5, 2017, Technical Analysis

The British pound went sideways initially during the day on Wednesday, but pulled back towards the 149 level. We found enough support underneath to turn around and reach towards the 150 level again. If we can break above the 150 level, the market should continue to go much higher, as it would show a significant amount of bullish pressure building up and of course and overcoming of a large, round, psychologically significant number. Once we break out to the upside, I think that the market then goes looking towards the 152.50 level after that, and then eventually the 155 handle.
This is a very risk sensitive currency pair, so keep in mind that stock markets can be reason enough to lift this market, perhaps sending it much higher. On the other hand, if the stock markets breakdown, that could be reason enough for this market to roll over. If we break down below the 148.50 level underneath, that is a very negative sign, reaching towards the 1.45 handle over the longer term. I believe that the market has more of a proclivity to go to the upside though, especially with the Bank of England likely to raise interest rates while the Bank of Japan is systematically doing everything he can to break down the value of the Japanese yen. I like the idea of going long, but I need to see a clearance of the 150 handle on a daily close to feel comfortable doing so after the recent selloff that we had seen. Geopolitical concerns can cause a bit of volatility as well, so pay attention to headlines coming out of the news. Overall though, I think we are trying to build a base to go much higher in this market.

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