The GBP/JPY pair is developing an impulse wave C of the medium term downtrend from 133.32 (light green in the chart). Within this wave we have four subwaves (royal blue in the chart), and a potential corrective subwave 4 developing from 127.82. Within this wave there are three subwaves (orange red in the chart); an impulse subwave C is developing from 128.72.
The immediate resistances are Fibonacci retracements of 133.19-127.82, and expansions of 127.82-129.29-128.72.
Resistances:
- 129.63 = contracted objective point (COP)
- 129.87 = .382 retracement
- 130.19 = objective point (OP)
- 130.51 = .50 ret
If the price continues to decline, the immediate supports will be Fibonacci expansions 133.42-129.94-133.32, 133.32-130.08-133.19, 133.19-127.82-129.51.
Supports:
- 127.69 = expanded objective point (XOP)
- 126.19 = COP
Overbought/Oversold
The bigger wave is now moving down, so it is better to try short positions when the Detrended Oscillator goes above the zero level (20-25 pips above the current prices) or into the overbought area (50-65 pips above the current prices). Watch for opportunities to go short at or near the indicated resistances.
