The British pound has been all over the place against the Japanese yen as you would expect in a time of uncertainty. The market initially rallied above the ¥130 level but gave back the gains to plunge below that level and reach towards the ¥129 level by the time the Americans stepped on board. At this point, the market looks as if it is ready to go lower, and that rallies should be sold into. While this is a “risk sensitive currency pair”, the reality is that even though the stock markets in America are trying to break to the upside for a major move, the reality is that the British pound itself is getting hammered during the trading session. This is probably more about the British pound in the meantime than it is running towards the Japanese yen for safety.
GBP/JPY Video 18.03.20
If we can break down below the lows of the Monday session, it opens up the door to reach down towards the ¥127 level. At that point, you would reach the 100% Fibonacci retracement level, which will cause a certain amount of support, if for no other reason than the psychology of it. Breaking down below there opens up the door to the ¥125 level. On the other hand, if the market breaks above the highs of the day for Tuesday, then it’s likely that the ¥134 level will be a bit of a short-term ceiling. I simply don’t see the reason to start buying at this point, and therefore it is either a sell of a break lower or sell of exhaustion above as the market runs out of steam.