The British pound has fallen a bit during the trading session on Friday but has also seen buyer step in near the ¥136.50 level. At this point, the market looks as if it is trying to bounce, and therefore we could see traders trying to cover short positions. However, if the market was to turn around a break above the 200 day EMA, it would show quite a bit of resiliency and could attract more buyers. Having said that, it’s not until we clear the ¥139 level that there would be a bit of confidence.
GBP/JPY Video 09.03.20
Alternately, if the market was to break down below the bottom of the candlestick for the trading session on Friday, then the market could unwind and reach towards the ¥135 level. If the market breaks down below there, then the whole thing could unravel and go looking towards the ¥130 level. With the coronavirus and diffuse of recession out there causing a lot of trouble, that is a very real scenario at this point. In fact, you can use the USD/JPY pair as a secondary indicator, as it would show the strength or weakness of the Japanese yen. If that pair breaks down below the ¥105 level, then it should have a bit of a “knock on effect” over here. At this point, it certainly looks a bit bleak but there is some support just underneath. Another indicator that you can use would be the stock markets, and whether or not they break down.