The no vote to Ms. May's EU deal first caused GBP/JPY to spike lower to the minimum corrective target at 137.37 and then to spike strongly higher. We are now left in a dilemma. Is wave ii complete at 137.37 or will a more complex correction take place and take GBP/JPY lower again to the 50% corrective target at 135.07.
The key is resistance at 140.43 as long as this resistance is able to cap the upside, we have to accept the possibility of a more complex wave ii developing.
If, however a break above 140.43 is seen, that will indicate wave iii already being in motion for a rally to 151.50.
The no vote to Brexit will be followed by a no confidence vote to Ms. May, which will be held today enforcing the uncertainty and volatility.
R3: 140.90
R2: 140.43
R1: 140.03
Pivot: 139.63
S1: 138.96
S2: 138.53
S3: 137.85
Trading recommendation:
We will buy GBP at 135.20 or upon a break above 140.43