The British pound had a choppy session against the Japanese yen, but in the end, seems to be trying to form a bit of a base near the 141.50 level. Because of this, I think we could see a bounce coming, perhaps reaching towards the 143 level above. Alternately, if we break down below the 141.50 level, the market could find itself reaching towards the psychologically significant 140 handle underneath. This market is very sensitive the risk appetite, so keep in mind that stock markets do influence where we go next, as well as commodity markets. In general, I think that this pair will lag the other yen related pairs, because there are so many questions and concerns when it comes to the British economy. With this being the case, although I could see a pop higher from here, it’s likely that other yen related pairs well perform such as the AUD/JPY pair or the NZD/JPY pair.
I think a small position to the upside could be initiated, but again, I believe that your trading capital could be better positioned another markets that we don’t necessarily follow here. Ultimately, a break above the 143 handle would be extraordinarily bullish in this market, and have me aiming for the 145 handle, which should be accompanied by surges higher in the other yen related pairs. If you get both, then obviously we have seen a complete turnaround, and it could be more of a “buy-and-hold” trade, but in the meantime, I think the market is comfortable sitting here and churning the recent losses, as we try to decide if we are going to build a base, or continue the downtrend. This is the wrong time of year to expect massive amounts of liquidity in the market, so the move will probably be a bit slow anyway.
GBP/JPY Video 18.8.17
This article was originally posted on FX Empire