On Tuesday GBP/JPY slightly broke above previous resistance 118.13 - only to form subwave C (colored yellow in the chart) within wave A of bigger degree (colored orange red in the chart). Now we have subwave B developing from 118.21, that is part of wave B of larger degree developing from 117.22.
However if the price breaks below 117.22 - we'll have wave C from 118.21, that will be part of wave C of still larger degree, that is developing from 119.05 (this one is colored royal blue in the chart). In this case the targets below will be Fibonacci expansions off 122.71-118.20-119.05, 120.14-118.20-119.05, 119.05-117.22-118.21.
Supports:
- 117.11-08 = confluence area of objective point (OP) and contracted objective point (COP)
- 116.38 = OP
- 116.26 = COP
- 115.91 = expanded objective point (XOP)
- 116.38 = OP
- 116.26 = COP
- 115.91 = expanded objective point (XOP)
But if the corrective wave resumes and the price keeps moving up we'll have the following resistances as targets - retracements of 119.05-117.22:
- 118.35 = .618 retracement
- 118.66 = .786 ret
- 118.66 = .786 ret
Overbought/Oversold
The bigger wave is now moving down, therefore it's preferable to try short positions when the Detrended Oscillator gets above the zero level (15-20 pips above the current prices) or into the overbought area (35-45 pips above the current prices). Watch for entries short at or near the indicated Fibonacci resistances.
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