The GBP/JPY pair is developing a corrective wave B of the medium term downtrend from 127.76 (light green in the chart) including three subwaves (red in the chart) and a potential impulse subwave C developing from 127.97.

Presently the upside targets are Fibonacci retracements of 130.71-127.76, 131.75-127.76 and expansions of 127.76-129.32-127.97.

Resistances:

- 128.93 = contracted objective point (COP)
- 129.53-58 = confluence area of objective point (OP) and .618 retracement
- 129.76 = .50 ret
- 130.23 = .618 ret

The targets below 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)

Overbought/Oversold

The bigger wave is now moving downside, so it is recommended to try short positions when the Detrended Oscillator goes above the zero level (current prices) or into the overbought area (20-35 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.