The GBP/JPY is developing corrective wave B to 129.75-133.00 (if this wave is to become subwave A - colored magenta in the chart - within wave C of larger degree - colored royal blue in the chart). Or this wave may become wave A and terminate all the movement up from 129.49 to 133.00.
The targets of the downmove as of now are Fibonacci retracements of 129.49-133.00, 129.75-133.00, and expansions off 133.00-131.52-131.98.
Supports:
- 131.38-25 = confluence area of .50 retracements, already hit (!)
- 130.99 = .618 ret
- 130.83 = .618 ret
If the uptrend resumes and the price breaks above 133.00 then the immediate resistances will be Fibonacci expansions off 125.47-132.48-129.49, 129.49-132.64-129.75, 129.75-133.00-131.29.
Resistances:
- 133.25-30 = confluence area of two contracted objective points (COP)
- 133.82-85 = confluence area of COP and objective point (OP)
- 134.54 = OP
- 134.81-85 = confluence area of two expanded objective points (XOP)
Overbought/Oversold
Assuming that the medium term trend is still up it's preferable to use oversold readings of the Detrended Oscillator or its cross below the zero level to consider long positions. The oscillator is now slightly above the zero which means a retracement is needed fot a long entry. The zero level is 15 pips away (132.70) and the oversold area is 35-45 pips below the current price (132.50-40).
Read more on how to apply Fibonacci studies to calculate price targets.
