We expected GBP/JPY to spike higher to 140.35 to complete blue wave iii and set the stage for a minor correction in blue wave iv. However, the sideways consolidation that started on July 31 has continued to dominate the picture here. GBP/JPY is likely to break out of the 137.72 - 139.12 range towards the upside for the long-expected spike higher. It will test the 140.35 level. Once this level has been tested, we may see a decrease of blue wave iv to the 137.72 - 137.98 area before the next impulsive rally higher through the peak at 140.35 to 144.29.
R3: 140.35
R2: 139.80
R1: 139.20
Pivot: 138.75
S1: 138.34
S2: 137.98
S3: 137.72
Trading recommendation:
We are long EUR from 135.48 and upon a break above 139.12 we will raise our stop to 137.70. We will take profit on 50% of our long position at 140.25.
