GBP/JPY has possibly ended corrective wave B of medium term downtrend (colored royal blue in the chart - 139.93-132.90) and is now beginning subwave A (colored magenta in the chart) of a new leg down. As of now there are three waves of still smaller degree in potential subwave A - they are A, B and C - colored red in the chart. The targets of the downmove are Fibonacci retracements of 132.90-135.87, and expansions off 135.87-134.71-135.86.
Supports:
- 134.38 = .50 retracement
- 134.03-133.98 = confluence area of .618 ret and expanded objective point (XOP)
- 132.82 = super expanded objective point (SXOP)
If the price reverses up the immediate resistances will be Fibonacci retracements of the wave down from 135.86 - this wave is not developed yet.
Overbought/Oversold
Assuming that the wave of a larger degree is moving down it's preferable to open short positions when the Detrended Oscillator gets above the zero level (30-35 pips above the current prices) or into the overbought area (55-65 pips above the current prices).
Read more on how to apply Fibonacci studies to calculate price targets.
