The British pound has broken down significantly during the trading session on Friday, as we continue to see a major breakdown and risk appetite. The Japanese yen is acting as a safety currency again, so having said that it’s likely that the markets will continue to drive toward the yen until the overall attitude of traders around the world stabilizes. Having said that though, it’s difficult to imagine a scenario where we will see some type of major turnaround right away. On the other side of that equation is the fact that the market is getting oversold, so a bounce is probably very likely. Even if that’s the case though, it’s very difficult to simply just jump in and buy this market because it is “cheap.”
GBP/JPY Video 02.03.20
If we break down below the ¥139 level, then the bottom will fall out of this pair and we will continue to go much lower. It should be noted that the British pound has held up a little bit better against the Japanese yen over the last several months, so this pair may have further to fall than other ones. When compared to other pairs such as the AUD/JPY and the NZD/JPY, there’s much more real estate to the downside if we do get a complete breakdown and collapse in confidence. Rallies at this point will probably be sold into unless of course something changes drastically, so we will probably have to look towards the weekly chart in order to make a bigger decision. If that’s the case, pay attention to how it breaks and of course my analysis here on longer time frames. This clearly looks very bearish at the moment though.