The GBP/JPY pair is developing the potential corrective wave B (royal blue in the chart) of the medium term downtrend as long as the point 130.04 remains unbroken to the upside. The wave comprises the subwaves A and B (red in the chart) and a potential subwave C developing from 128.11.
Now the downside targets are Fibonacci retracements of 126.48-129.69 and expansions 130.04-126.48-129.69, 129.69-128.11-129.05.
Supports:
- 128.09-07 = confluence area of .50 retracement and contracted objective point (COP)
- 127.71 = .618 ret
- 127.49-47 = confluence area of COP and objective point (OP)
However, if the price continues the upward movement, the immediate resistances will be Fibonacci expansions 126.48-126.69-128.11.
Resistances:
- 130.09 = COP
- 131.32 = OP
Overbought/Oversold
The bigger wave is now moving up, so it is preferable to try long positions when the Detrended Oscillator goes below the zero level (current prices) or into the oversold area (25-40 pips below the current prices). Watch for the opportunities to open long positions at or near the indicated supports.
