GBP/JPY has exceeded the limits of wave 4 (50% of wave 3 or the top of wave A) and is therefore moving within corrective wave B of a larger degree - colored light green in the chart. On smaller timeframes this corrective wave consists of A-B-C subwaves (colored red) with subwave C developing. The targets of the downmove are Fibonacci retracements of 126.43-134.19, and expansions off 134.17-132.61-133.36.
Supports:
- 130.84 = expanded objective point (XOP), reached already (!)
- 130.31 = .50 retracement
- 129.39-28 = confluence area of .618 ret and super expanded objective point (SXOP)
If the price reverses up the nearest resistances will be Fibonacci retracements of 133.36-130.83.
Resistances:
- 131.80 = .382 ret, reached already
- 132.10 = .50 ret
- 132.39 = .618 ret
Overbought/Oversold
The Detrended Oscillator has made a huge peak below the previous ones which confirms a downwave of large degree. Assuming that the medium term trend has changed and is now headed down, it's preferable to wait for pullbacks to initiate short positions. Fib retracements (see above) or overbought area (30-40 pips to go) are more reliable levels to enter.
Read more on how to apply Fibonacci studies to calculate price targets.
