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

Presently the downside targets are Fibonacci retracements of 130.71-127.76, 131.75-127.76 and expansions 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 downside targets are Fibonacci expansions of 131.75-127.76-129.32, 130.71-127.76-129.32, 129.32-127.97-128.71.

Supports:

- 127.98 = COP
- 127.50 = COP
- 127.36 = OP
- 126.85 = COP

Overbought/Oversold

The bigger wave is now moving down, so it is preferable to try short positions when the Detrended Oscillator goes above the zero level (10-15 pips above the current prices) or into the overbought area (30-40 pips above the current prices). Consider the opportunities to go short at or near the indicated resistances.

Read more on how to trade with Fibonacci levels.