GBP/JPY dropped much lower than we had expected and now, it is testing the 78.6% corrective target and the channel support line. At the same time, we saw the bullish divergence for the RSI. This points to an impulsive rally in the near future. However, we were disapointed the last time we were waiting for a turnaround. Therefore, we would like to see minor resistance at 133.63. It is even more important to see that resistance at 134.35 is broken before we are on the safe ground and wait for a new impulsive rally towards 139.74 on the way higher to 148.32.

Support at 131.63 must be able to protect the downside. Otherwise, we will have to review and re-count the rally from 129.30.

R3: 135.14

R2: 134.35

R1: 133.63

Pivot: 133.09

S1: 132.68

S2: 132.36

S3: 131.85

Trading recommendation:

Our stop at 133.10 was hit by a loss and we will re-buy GBP here at 132.85 and place our stop at 131.55.