There is an ominous tone of instability in the market on Monday, as we have been all over the place. Initially, the GBP/JPY pair broke down rather significantly as the Japanese yen strengthened right out of the gate. However, there were conflicting headlines about the United States and China speaking, and now it has the markets figuring out what to do next. All things being equal, the default scenario is that you should always pay attention to the longer-term trend. There is no way to look at this chart in suggest that the longer-term trend is anything but negative.
GBP/JPY Video 27.08.19
Looking at the chart, it makes sense that the ¥130 level would cause a bit of resistance because it is a large, round, whole number. We gapped lower to kick off the trading session and then fill that gap rather rapidly. Now we are starting to pull back yet again. Because of this I do believe that we continue to go lower but even if we don’t the 50 day EMA is above and ready to cause a lot of noise at the ¥132.50 level. In other words, it isn’t really a question as to which direction you should be trading but when you should be trading that direction. I suspect that were probably going to fall from here but even if we don’t then I would simply stand on the sidelines and wait for a selling opportunity closer to the ¥132.50 level. I have no interest in buying this pair, the Brexit continues to cause issues, and of course trade tensions are going nowhere anytime soon.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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