The British pound has initially fallen rather drastically against the Japanese yen for most of the week but ended up bouncing rather significantly. The British pound has not recovered against the US dollar the way it has the Japanese yen, but when you look at the US dollar against the Japanese yen, you can see that the yen itself has been sold so that may have exacerbated part of this move. That being said, I do believe that this is a bit of a “false signal” to start buying. I think we are more likely than not to see any rally sold into at the next bit of fear that comes down the road. I think that the market isn’t going to be as bad as it once was, but clearly there are plenty of negativities out there just waiting to and overwhelm traders.
GBP/JPY Video 23.03.20
If we break the top of the candlestick for the week, I believe that the next target will be the ¥136 level, and then eventually the ¥140 level. At that juncture I would anticipate seeing a lot of selling pressure. Furthermore, we could very well just drop right away on Monday and start reaching towards the support based upon the candlestick for this past week. Either way, I’m a bit cautious about buying and I am much more comfortable shorting, at least for the next 30 days or so. Keep in mind that this pair tends to move right along with risk appetite, which of course is a bit shattered at the moment.