The British pound initially tried to rally during the trading session, but then rolled over to show signs of extreme weakness. In fact, the market fell almost all the way down to the longer-term target that I had suggested previously, which is the 100% Fibonacci retracement level in the neighborhood of ¥127. With that being the case, now we have to ask questions of where we go next, but at this point I think a short-term bounce is very possible. This will be especially true if stock markets in the United States rally.
GBP/JPY Video 19.03.20
If the market was to recapture the ¥130 level, then it’s likely that we could go to the ¥132.50 level. Otherwise, if we break down below the ¥127 level on a daily close, it’s very likely that we will go looking towards the ¥125 level which is the next large, round, psychologically significant figure. At this point, the market is likely to see even more volatility but it’s difficult to simply sell here. We need to make a fresh, new low before we can do so. This pair is going to be very noisy, as the headlines continue to throw the markets around rather drastically and this pair is so sensitive to risk appetite in general.
Because of this, the most important thing you can do is cut your position size and half due to the fact that there is a ton of volatility in you may find yourself up or down 100 pips rather quickly. While that sounds enticing, it can also be disastrous.