GB/JPY rallied nicely into our expected target at 139.07 (the peak was seen at 139.77) with the target for red wave iii fulfilled, we should now expecte a correction in red wave iv to unfolding in the coming days. This correction will ideally dip into support in the 137.10 - 137.60 area before the next impulsive rally should be expected.
We also have a good idea how red wave iv will unfold due to the alternation principle. As red wave ii was a deep simple zig-zag correction, we expect red wave iv to be complex in nature and a shallow correction only correcting a minor part of red wave iii. The 23.6% correction is seen at 137.60, while the 38.2% correction is seen at 136.29.
R3: 139.77
R2: 139.45
R1: 139.07
Pivot: 138.78
S1: 138.15
S2: 137.82
S3: 137.60
Trading recommendation:
We are long GBP from 131.95 and we will take 50% profit here at 139.07 for a nice 712 pips profit and keep our stop at 135.05 for the final 50%.
