The GBP/JPY has developed 5 waves of the medium term uptrend - colored red in the chart. Current wave down is potential wave A of A-B-C cycle. The targets below the current level are Fibonacci retracements of 125.47-129.27 and expansions off 129.27-128.43-129.19.
Supports:
- 128.35 = objective point (OP)
- 127.83-82 = confluence area of expanded objective point (XOP) and .382 retracement
- 127.37 = .50 ret
- 126.99-92 = confluence area of super expanded objective point and .618 retracement
If the price breaks above 129.27 to continue the uptrend the nearest resistances will be Fibonacci retracements of 133.03-125.47 and expansions off 125.47-128.61-127.37.
Resistances:
- 129.25-31 = confluence area of .50 retracement and contracted objective point (COP), already hit (!)
- 130.14 = .618 retracement
- 130.51 = objective point (OP)
Overbought/Oversold
Although the medium term trend is up the Detrended Oscillator has shown a clear divergence between the peaks of wave 3 and wave 5, the price has hit .50 retracement, so be ready for a reversal. Now it's preferable to use overbought readings in conjunction with Fib resistances to consider short positions. Resistance zone at 129.25-31 is the one to look for topping signals.
Read more on how to apply Fibonacci studies to calculate price targets.