British pound breaks through major uptrend line against yen on Friday

The British pound broke down on Friday, breaking through the uptrend line and the psychologically important 147.50 level. If we can break down below the hourly hammer, which is extensively the 147 handle, the market should continue to go much lower, perhaps reaching towards the 145 level. Rallies at this point would be very difficult to take advantage of, unless of course we broke above the 148.50 level. If we can break above that level, the market probably could go to the 149 handle, then the 150 handle. However, I suspect that now that we have seen this type of negativity, it’s very unlikely that we can buy this market for any length of time. A breakdown below the 147 handle should send this market lower in a rapid manner.

Alternately, I think if we break above the 150 handle we could see this market go much higher over the longer term, but it’s not until then that I would be convinced of a significant move. Because of this, I am looking for opportunities to short this market now that we have seen this major change in attitude. I believe that we may be ready to see more of a “risk off” move in several markets around the world, and of course the GBP/JPY pair tends to be an excellent place to express that opinion. Remember that this pair does tend to be a bit erratic though, and that of course will scare some people.