GBP/JPY is moving within subwave A (colored red in the chart) of wave 5 (colored magenta) of medium term downtrend. Within subwave A there are four waves of still smaller degree - colored orange red in the chart. Wave 4 is still developing. The targets of the upmove are Fibonacci retracements of 127.99-126.10.
Resistances:
- 126.82 = .382 retracement, already hit (!)
- 127.04 = .50 ret
- 127.27 = .618 ret
If the price continues the downtrend the nearest supports will be 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), 128.54-127.34-127.99 (subwaves A-B).
Supports:
- 126.05 = expanded objective point (XOP)
- 125.96 = contracted objective point (COP)
- 125.64-59 = confluence area of super expanded objective point (SXOP) and objective point (OP)
- 125.17 = XOP
Overbought/Oversold
Assuming that the medium term trend is down it's preferable to use overbought readings of the Detrended Oscillator. The overbought area is 15-20 pips away from the current price and now the oscillator is above the zero level. So 126.82 is the level to watch for topping signals to enter short positions.
Read more on how to apply Fibonacci studies to calculate price targets.
