The British pound has broken down against the Japanese yen, slicing below the ¥132 level. That is an area that has been important more than once, and therefore it is likely that this is a significant move that will go looking towards much lower levels. At this point, I anticipate that the market is going to be looking for the ¥130 level, perhaps even lower than that based upon the overall attitude and risk appetite of traders around the world. Remember that this pair is sensitive to that, so when risk appetite rolls over, so it is this pair.
GBP/JPY Video 07.05.20
At this point, the ¥130 level will be remarkably interesting for most participants, because it will be a large, round, psychologically significant figure that people are more than willing to pay attention to. With that being the case, I do like the idea of fading rallies as well on short-term charts, so I think that there will be multiple trade setups available. With the jobs number coming out on Friday and possibly sending the market into a tizzy, that could be yet another reason to think that negativity is coming.
At this point, a retest of the bottom is potential as well, but that is not what I am focusing on at the moment. As far as buying is concerned, I have no interest in doing so, because quite frankly this was a rather significant move that is just screaming that we should continue to go much lower. This being the case, it is likely that the market will be decidedly negative overall.
This article was originally posted on FX Empire
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