The British pound has initially rally during the course of the trading session on Tuesday but has given up those gains near the ¥150 level. After the nasty looking candlestick from Monday, it does suggest that perhaps we will have further downside ahead, which makes quite a bit of sense as we get closer to the bond payment due from Evergrande, which is front and center when it comes to risk appetite. With that in mind, keep in mind that the Japanese yen is considered to be a “safety currency”, and therefore this pair does tend to be very sensitive to risk appetite overall.
GBP/JPY Video 22.09.21
If we were to turn around a break above the ¥150 level, then I think we go looking towards ¥151, which is where the nasty selloff began on Monday. With that being the case, it is very likely that we see selling pressure yet again. To the downside, if we were to break down below the ¥149 level, it could open up a move down to the ¥145 level, possibly even the ¥140 level after that. When you look at the longer-term chart, you can make an argument for a “complex head and shoulders”, which of course is an extraordinarily negative turn of events.
Quite frankly, this is a very sickly looking chart, and therefore if we are to look at the overall attitude of the markets in general, this could be an excellent place to express a negative and fearful attitude when it comes to global markets. That being said, I would be very hesitant to get overly bullish of this market anytime soon, because it is clearly struggling overall.
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