The British pound initially broke above the ¥135 level before finding resistance above to break back down and reach towards the ¥132 level. Keep in mind that this pair is overly sensitive to risk appetite so you should probably follow other markets at the same time. For example, they generally will trade this market down if the stock market’s collapse, but at the same time buy it if they rally. That is not always the case, but quite often you will see a sudden and drastic moves.
GBP/JPY Video 22.06.20
A breakdown below the ¥132 level could open up the door to the ¥129 level, an area that has been supportive previously. Ultimately, this is a market that I think will continue to see noisy trading back and forth, and as a result I think you will have to pay attention to how traders pay attention to risk appetite overall. The candlestick is extremely negative, and it does look like we are heading closer to a “risk off” type of environment looking at other currency pairs so I do think that we more than likely will break down below ¥132.
All things being equal, this is a pair that you probably need to pay attention to on close time frames, not necessarily the weekly chart in order to play the move that we have laying out in front of us here on the weekly charts. I do think that there is plenty of volatility ahead, so you should be cautious about your position sizing, but it certainly looks negative at this point.
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This article was originally posted on FX Empire
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