The GBP/JPY is moving within corrective subwave B (colored red in the chart) of wave 5 (colored magenta) of medium term downtrend. The targets of the corrective upmove are Fibonacci retracements of 127.99-126.09 and 128.54-126.09.
Resistances:
- 126.82 = .382 retracement
- 127.03-04 = confluence area of .382 and .50 retracements
- 127.26-32 = confluence area of .618 and .50 retracements
- 127.60 = .618 ret
If the downtrend continues and the price breaks below 126.09 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)
- 125.17 = XOP
Overbought/Oversold
Assuming that the medium term trend is down but current wave up is corrective it's preferable to use overbought readings of the Detrended Oscillator and a Fib resistance to consider shorts. The overbought area is 25-35 pips away from the current price. So 126.82 and 127.03-04 are the levels to watch for topping signals to enter short positions.
Read more on how to apply Fibonacci studies to calculate price targets.
