GBP/JPY broke out of the falling channel to the upside, missing our forecast. However, a break above short-term key resistance at 133.19 will indicate an upward trend. If it comes true, we should expect a rise in wave iii towards at least 141.05 and more likely an extended rally closer to the 161.8% extension of a wave i at 148.32 in wave iii.

Only a break back below 129.63 will reconfirm our preferred bearish outlook. Now we must wait for a clear movement of the pair to decide which of the two scenarios is the correct one. The pair may break below 129.63 or above key resistance at 133.19.

R3: 133.67

R2: 133.19

R1: 132.53

Pivot: 132.05

S1: 131.73

S2: 131.46

S3: 130.76

Trading recommendation:

Our stop at 131.50 was hit for a small 38 pips gain. We will have to await a clear trade signal before re-entering this cross.