The GBP/JPY is developing corrective subwave B (colored red in the chart) within impulse wave C of the medium term uptrend (colored magenta in the chart). The latter in its turn is part of wave C of larger degree (colored royal blue in the chart).
The targets of the downmove are Fibonacci retracements of 133.24-135.52, and 131.62-135.52.
Supports:
- 134.11-03 = confluence area of .618 and .382 retracements
- 133.57 = .50 ret
- 133.11 = .618 ret
If the uptrend resumes the immediare resistances will be Fibonacci expansions off 125.47-132.48-129.49, 129.49-132.64-129.75, 129.75-133.31-131.62, 131.62-134.31-133.24, 133.24-135.52-134.24.
Resistances:
- 135.65 = contracted objective point (COP)
- 135.93 = objective point (OP)
Overbought/Oversold
Assuming that the medium term trend is 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 flattening around the zero level and the oversold area is within 30-40 pips of the current price. Therefore wait until the price hits a significant Fib support (134.38 or 134.11) and start looking for signals to go long.
Read more on how to apply Fibonacci studies to calculate price targets.
