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GBP/JPY forecast for the week of December 18, 2017, Technical Analysis

Christopher Lewis
Updated
The British pound fell significantly during the week, as we continue to see a lot of noise in the market. Keep in mind that this market is highly sensitive to risk appetite, and of course the noise coming out of the negotiations between Great Britain and the European Union.

The British pound has fallen significantly against the Japanese yen, dropping below the 150 handle by the end of the week. However, this is a market that I think will continue to find buyers underneath, maybe closer to the 148 handle. This pair is very sensitive to risk appetite in general, so keep an eye on the stock markets as they can have a lot to say about where we go next as the correlation is rather high. A break above the 153 handle is a sign that we can go much higher, perhaps reaching towards 165 over the longer term, but in the meantime, I think that the building a longer-term bullish position might be the best way to go going forward.

I believe that if we break down below the 145 handle, things could change and send this market looking for much lower levels. In the meantime, my thesis is that it won’t happen, but given enough time it’s likely that we will find value hunters. Those value hunters should continue to be opportunistic when it comes to this market, and the highflying attitude of “The Dragon.” I believe that by the end of 2018, we will be much higher, not lower when it comes to this pair. However, following the markets will of course always be the best way to trade, trade which you see and not what you think. Small position sizing is important, as the volatility can be difficult to deal with. As the trade goes in your way, then you can look to adding.

GBP/JPY Video 18.12.17

This article was originally posted on FX Empire

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