The GBP/JPY is now correcting the whole movement up from 133.24, however this wave down (colored red in the chart) may become wave A of A-B-C cycle down. The targets of the downmove are Fibonacci retracements of 134.24-133.56, 133.24-135.56, 131.62-135.56, and expansions off 135.56-134.88-135.28.
Supports:
- 134.86 = contracted objective point (COP)
- 134.74 = .618 retracement
- 134.67-60 = confluence area of .382 ret and objective point (OP)
- 134.40 = .50 ret
- 134.18-18-05 = confluence area of expanded objective point (XOP), .618 and .382 retracements
If the price breaks above 135.56 the immediate resistances will be Fibonacci expansions off 125.47-132.48-129.49, 129.49-132.64-129.75, 129.75-133.31-131.62, 131.62-134.31-133.24, 133.24-135.52-134.24.
Resistances:
- 135.65 = contracted objective point (COP)
- 135.93 = objective point (OP)
- 136.50-52 = confluence area of two OP's
Overbought/Oversold
Assuming that the medium term trend is up, it's preferable to use oversold readings of the Detrended Oscillator or its cross below the zero level to consider long positions. The oscillator is now going up from below the zero level and just hit 134.90 support (.50 ret), therefore now is a good time to consider longs.
Read more on how to apply Fibonacci studies to calculate price targets.