The GBP/JPY pair is developing a corrective wave B of the medium term downtrend from 127.76 (light green in the chart). Within this wave we have two subwaves (red in the chart) and a potential corrective subwave B developing from 129.32.

The downside targets are Fibonacci expansions of 131.75-127.76-129.32, 130.71-127.76-129.32.

Supports:

- 127.50 = contracted objective point (COP)
- 126.85 = COP
- 126.37 = objective point (OP)

If the price reverses to the upside, the immediate resistances will be Fibonacci retracements of 130.71-127.76, 131.75-127.76.

Resistances:

- 129.58 = .618 retracement
- 129.76 = .50 ret
- 130.23 = .618 ret

Overbought/Oversold

The bigger wave is now moving downwards, so it is recommended 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.

Read more on how to trade with Fibonacci levels.