GBP/JPY is developing medium term uptrend, corrective wave 4 - colored red in the chart. The targets of the corrective downmove are Fibonacci retracements of 125.74-128.61 (wave 3), 125.47-128.61 (waves 1-2-3), and expansions off 128.61-127.37-128.07 (subwaves A-B-C within wave 4 - colored yellow in the chart).
Supports:
- 127.30 = contracted objective point (COP)
- 127.18 = .50 retracement
- 127.04 = .50 ret
- 126.84-83 = confluence area of .382 retracement and objective point (OP)
- 126.67 = .618 ret
- 126.06 = expanded objective point (XOP)
If the price reverses up the nearest strategic resistances will be Fibonacci retracements of 133.03-125.47 and expansions off 125.47-127.00-125.74 (waves 1-2), 125.74-128.61-127.37 (waves 3-4).
Resistances:
- 129.14 = COP
- 129.25 = .50 retracement
Overbought/Oversold
Assuming that the medium term trend is up but the wave down is corrective (4) it's preferable to use oversold readings of the Detrended Oscillator and a Fib support to consider long positions. The price is already below the zero level and 70% oversold is just within some pips. To be on the safe side consider longs only when the price hits 127.30 support, or lower (127.18).
Read more on how to apply Fibonacci studies to calculate price targets.