GBP/JPY Forecast October 6, 2017, Technical Analysis

The British pound fell precipitously during the session on Thursday, reaching down below the 148 level against the Japanese yen. We now look very vulnerable to downside pressure, and I think it’s only a matter of time before we start falling again. Because of this, I think that selling short-term rallies will probably be the easiest way to trade this market, and I think if we break down below the 147.50 level, we will probably go looking towards the 145 handle. This is a market that should continue to move with risk appetite, as it typically does. The stock markets rally, we may get a rally here but you should also keep in mind that the British pound has faced significant pressures over the course of the last couple of sessions. Because of this, I think that you will see volatility at the very least, and explosive bearish pressure on the extreme end. If we were to break above the 148.50 level, then I think that the market probably can continue to rally. However, the 150 level above should offer significant resistance. It’s not until we break above that level that I would feel comfortable hanging onto a longer-term “buy-and-hold” trade at this point.
Pay attention to stock markets overall, because they of course will influence and show just where the overall risk appetite of global traders is. As it rises, this pair will rise as well. Alternately, if it falls, so will this pair. This is a highly sensitive market when it comes to risk appetite, so keep that in mind. Keep your position size small, because I think we are on the precipice of something big. Ultimately, I have those handful of levels to pay attention to, and I will take advantage of them when they get broken.