GBP/JPY broke above the key resistance at 142.50 and continued higher to test the resistance line near 142.70 and peaked at 142.75 before turning lower again. So now we are in a dilemma because we can make a case that this rally was part of a wave iv/ triangle and a final dip below 140.80 still will be seen in wave v/ towards 139.24.

However, the break above the key resistance at 142.50 could indicate a premature low being in place at 140.80 and a new impulsive wave already developing. However, to confirm this being the case, we still need a break above the minor peak at 142.75 and more importantly a break above 143.38.

For now we will let time show which scenario is correct.

R3: 143.38

R2: 142.75

R1: 142.48

Pivot: 142.29

S1: 142.06

S2: 141.73

S3: 141.50

Trading recommendation:

Our stop at 142.50 was hit for a small profit of 30 pips. We will buy a break above 142.75 or wait for a test of our long-term target near 139.24.