GBP/JPY Price Forecast – British pound collapses on Friday

The British pound collapsed on Friday, slicing through the previous downtrend line that had been resistance. By wiping out as much value as we have, it shows just how fickle the markets are going to be to headlines. · FX Empire

Christopher Lewis

Updated Fri, Sep 21, 2018, 11:02 PM

The British pound broke down rather significantly after Teresa May suggested that there were at least a couple of issues that were far apart between the European Union and the United Kingdom when it comes to negotiating the Brexit. She suggested that a “no Brexit deal” scenario is possible. Ultimately though, that should end up being a buying opportunity because as soon as we get some type of either positive headlines or confirmation on any type of certainty, the British pound shows a proclivity to rally. However, I would not jump into this market right now, nor would I do it until we get at least a few hours of stability. Algorithmic trading is jumping in and punishing the British pound right now, which can be very relentless as anybody who has lived through a flash crash can tell you.

However, eventually it stops and then value hunters come in. I suspect that the ¥145 level will be crucial, but I also see the possibility of the ¥146 level offering support as well. I’m looking for support of candles to form, perhaps several hours in a row, and then possibly buying this pair on Monday as it should turn right around with most markets around the world. I think that we are still looking towards the ¥150 level given enough time, and I believe that level will eventually get broken as well, specifically once we know how things going play out. Another thing that could help is if the Americans and the Chinese stop bickering.