British pound testing serious support against Japanese yen

British pound likely to drift lower
April 24, 2019
EUR/JPY short-term outlook May 13
May 12, 2019
The British pound fell hard on Thursday, reaching down towards the crucial ¥144 level. At this point, I suspect that there is about a 50 pip range of buyers, so if we were to break down below the ¥143.50 level, then I would be a seller of not only a break of the horizontal support, but arguably a break of a descending triangle, something that we have already seen in the GBP/USD pair.

It’s not until we clear the ¥143.50 level that I’d be comfortable shorting though, because quite frankly the buyers could come in and try to pick this market up. A bounce from here could run into trouble at the ¥145 level, and then possibly even the ¥147 level. Overall, we have been bouncing around between the ¥144 level and the ¥147 levels and therefore so far we are looking at a potential bounce again, but as we press these lower levels we certainly are also in danger of opening up the “trapdoor.”

If we do break down, we could probably go down to the ¥140 level based upon the descending triangle, and quite frankly structural importance. The ¥142.50 level is where we see a bit of bullish pressure, so at this point that is also another potential target. I would expect a little bit of a pushback in that area on the breakdown, but the measured move is of course for the ¥140 level.

If we break out to the upside, we are probably going to need some type of help. That help of course would be in the form of certainty when it comes to the Brexit. Right now, we don’t have any type of clarity, only a bit of a delay. That delay could calm nerves, but it does look like we are likely to grind lower when it comes to the value of the British pound. Quite frankly, why would somebody want to own this currency as there is almost a guaranteed several months of uncertainty?

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