The British pound initially tried to rally during the week but gave back the gains rather quickly and sold off yet again. We are getting close to a major support level in the form of the 61.8% Fibonacci retracement level at the ¥138 level, and of course it is the bottom of the body of the massive candle stick that ended up forming the most recent bottom in the form of a major hammer. With that in mind, I suspect that we may get a bounce from rather soon, but it’s a very difficult market to get overly bullish about.
GBP/JPY Video 27.05.19
At this point in time, expect a lot of volatility and longer-term traders will probably be locked out of this market as there are far too many things that could go wrong in the short term. With that being the case though, pay special attention to the ¥138 level underneath, because it should be rather important. If we form some type of supportive daily candle stick, then perhaps the longer-term trader can start to nibble on a position. However, the easier trade to take would be that if the daily candle stick did close significantly below the ¥138 level, because it should open the door to the ¥135 level rather quickly, and then possibly the 131 young level.
Regardless, this is all about Brexit and global trade, neither which are necessarily supportive of this market, so although I would anticipate some type of bounce, I think it will be sold into.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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