Free fall on GBP/JPY yesterday

Posted on 09. Jul, 2009 by Jakob in Random Noise

If you guys were trading yesterday I am sure you have noticed a huge drop, specially in the GBP/JPY area. Just around London close yesterday, the GBP/JPY pair was moving around the 150.00 to 151.00 area. As we have seen before close to a year ago, the 150.00 area apparently has a great psychological effect as a support level (as well as resistance when broken). When the pair is moving down towards the 150 level, people have seen the before mentioned support effect, hence this level will contain a high amount of buy orders. When, for some reason, this pair keeps going down through these orders, and through the 150 support area, all these buy orders will be hit and then stopped out, as they will often tend to place stops just below the support level. Movements and breaks of support and resistance levels happens every day, but the 150 area of the GBP/JPY is heavier that many of these daily ones we often see. So yesterday when we had the break, we saw the pair go into a free fall from 150 and about 300 pips down within a very short timeframe (Click on the picture below). What will happen next? If wish I could tell. My guess is that it will go back up to around 151.30 and then back down again, a least for some time. What is your bet?

Tags: analysis, GBP/JPY

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Free fall on GBP/JPY yesterday

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