GBP/JPY has developed five waves of medium term downtrend (colored red in the chart) from 131.61 to 127.34. These 5 waves are the subwaves of wave C of larger degree (colored magenta in the chart). Current wave up is potential wave A in A-B-C cycle that is the retracement to 131.61-127.34. Now the targets above the current price level are Fibonacci retracements of 131.61-127.34 and 128.54-127.34.
Resistances:
- 128.08 = .618 retracement
- 128.97 = .382 ret
- 129.48 = .50 ret
- 129.98 = .618 ret
If the price resumes the downtrend and breaks below 127.34 the nearest supports will be Fibonacci expansions off 135.03-126.43-134.19, 134.19-129.33-133.03, 133.03-130.75-131.61 (waves 1-2), 131.61-127.43-128.54 (waves 3-4).
Supports:
- 125.96 = contracted objective point (COP)
- 125.64-59 = confluence area of super expanded objective point (SXOP) and objective point (OP)
Overbought/Oversold
Assuming that the pair is now trading in a flat but the prevailing trend is down it's preferable to use overbought readings of the Detrended Oscillator. The overbought area is 20-30 pips away from the current price which corresponds to 128.08 resistance.
Read more on how to apply Fibonacci studies to calculate price targets.
