The British pound has fallen a bit during the week against the Japanese yen, which makes quite a bit of sense considering that stock markets have been in meltdown mode and of course the Japanese yen is a safety currency. Looking at this candlestick, it’s clear that there is a lot of bearish pressure, but it would not be surprising at all to see a little bit of a bounce before selling off again. If that’s going to be the case that it makes sense that the market could drop from here. I believe that the ¥135 level will cause a little blip of support but breaking down below there will probably hinge more or less on the overall strength of the yen more than anything else. It certainly does look as if we could go lower but right now it’s probably better to fade rallies off of short-term charts more than anything else.
GBP/JPY Video 09.03.20
If we were to turn around and wipe out the losses from the week, it could be rather strong in conviction to the upside, but I don’t know that it happens anytime soon. I believe the ¥140 level above is significant resistance so it would take quite a bit for it to get violated. I think we are much more likely to see ¥135 before that happens. This isn’t so much in indictment on the British pound as it is in an indictment on the overall global concerns when it comes to the economy.