GBP/JPY has finished corrective wave 4 of the medium term downtrend - colored red in the chart - and is now moving in wave 5. On smaller timeframes this wave consists of A-B subwaves (colored orange red) with subwave B developing. The targets of the corrective upmove are Fibonacci retracements of 132.10-130.81, and of 134.19-130.81.
Resistances:
- 131.30 = .382 retracement, reached already (!)
- 131.45 = .50 ret
- 131.61 = .618 ret
- 132.10 = .382 ret
- 132.50 = .50 ret
- 132.90 = .618 ret
If the price breaks 130.81 to continue the medium trend the nearest supports will be Fibonacci retracements of 126.43-134.19, and expansions off 134.17-130.83-132.10.
Supports:
- 130.31 = .50 retracement
- 130.04 = COP
- 129.39 = .618 ret
- 128.76 = OP
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Overbought/Oversold
The Detrended Oscillator is flattening around the zero level confirming the short-term correction. Assuming that the major trend is still down it's preferable to seek for topping signals to go short when the price hits a Fib resistance (see above) or gets into the oversold - 20-30 pips to go (which corresponds to 131.45-131.61 resistance area).
Read more on how to apply Fibonacci studies to calculate price targets.
