The GBP/JPY is moving in correction to 135.56-131.14 (wave A of medium term downtrend - colored magenta in the chart). However the correction may be over at 134.04 and the wave down is the potential beginning of wave C.
The targets of the downmove are Fibonacci retracements of 131.14-134.04, and expansions off 135.56-131.14-134.04, 134.04-133.19-133.82.
Supports:
- 132.59 = .50 retracement
- 132.44 = expadned objective point (XOP)
- 132.25 = .618 ret
- 131.59 = super expanded objective point (SXOP)
- 131.31 = contracted objective point (COP)
If the price reverses up and breaks above 134.04 the immediate resistance will be Fibonacci expansion off 129.75-135.56-131.14.
Resistance:
- 134.73 = COP
Overbought/Oversold
Assuming that medium term trend is down it's preferable to use overbought condition of the Detrended Oscillator (current prices plus 35-45 pips) or its cross below the zero level (10-15 pips) to consider short positions.
Read more on how to apply Fibonacci studies to calculate price targets.
