The British pound has initially tried to rally during the trading session on Friday but gave back the gains, as we broke down below the bottom of the hammer from the previous session, before finding buying again. That being said, the market is struggling to break down through there on a sustained basis so it is highly likely that this market will end up being somewhat range bound. The ¥130 level seems to be offering a bit of support, but if that level gets broken through decidedly, then the market could drop rather quickly. Remember, this is a very risk sensitive currency pair, so as the markets go in general, so does the GBP/JPY pair.
GBP/JPY Video 18.05.20
The ¥132 level above is probably going to be significant resistance as well, as it was previous support. The market looks highly likely to go looking towards the ¥127.50 level, and then the ¥125 level given enough time. Overall, this is a market that continues to be noisy, but I would also suspect that the market is likely to fade rallies every time they happen, as the market looks likely to be susceptible to gravity. For what it is worth, the retail sales in the United States were much worse than anticipated, so that should favor the downside when it comes to risk assets. That of course will continue to be the case, as it is obvious that the markets have a lot to worry about currently. Fading rallies will continue to work out.
This article was originally posted on FX Empire
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