GBP/JPY has developed five waves of medium term uptrend (colored red in the chart). The whole 5-wave cycle started from 117.22 and may end at 121.98. However if the price breaks above 121.98, we'll have an extension - in this case a new A-B-C cycle will be moving from 119.58 (this is the base of wave 5). Now the targets above are Fibonacci retracements of 127.25-117.22, and expansions off 117.49-120.14-119.58 (these are waves 3 and 4), and 119.58-121.98-121.16.
Resistances:
- 122.23-24 = confluence area of objective point (OP) and .50 retracement
- 122.64 = contracted objective point (COP)
- 123.42 = .618 ret
- 123.56 = OP
- 123.87 = expanded objective point (XOP)
If the price reverses to the downside the immediate supports will be Fibonacci retracements of 117.22-121.98, and expansions off 121.98-121.16-121.78.
Supports:
- 121.27 = COP
- 120.96 = OP
- 120.45 = XOP
- 120.16 = .382 ret
Overbought/Oversold
The bigger wave is now moving up, therefore it's preferable to try long positions when the Detrended Oscillator gets below the zero level (current prices) or into the oversold area (current prices).
