Bottom line: GBPJPY enters buy zone after breaking resistance trend line and 144.00 levels in a flash. Bulls are targeting 148.87 levels now, before pulling back.
Technical Analysis:
GBPJPY bulls have managed to break through the 144.00 resistance zone defined last week and raised past its resistance trend line as well entering its buy zone. This event has changed the former bearish outlook and bulls are targeting fresh highs towards 148.87 resistance going forward. Looking at the wave counts since 126.60 lows earlier, GBPJPY seems to be producing extended wave 3 rallies after having carves Waves 1 and 2 at 130.69 and 126.67 levels respectively. Wave 3 seems to have already terminated or is expected to terminate around 148.87 resistance. With the medium term bearish structure potentially changing, we shall have our focus on the rally between 126.60 through 148.00 respectively. It is difficult to enter long positions at this price as a major boundary seems to be in place. It is better to stay aside for a while, allowing price action to take out resistance at 148.87 levels. Once that happens, a major boundary would be in place for a meaningful retracement to be produced. An aggressive trading strategy would be to initiate short positions after break of 148.87 resistance, against swing highs, with potential targets at 139.40 levels respectively. Please note that 139.40 is also the previous wave iv termination of a lesser degree. A more conservative trading strategy would be to remain flat and allow prices to retrace lower to initiate long positions for potential price targets towards 160.00 levels going forward. It is quite possible that GBPJPY has turned bullish for the medium to long term outlook and until prices remain above 126.60 mark, a series of higher highs and higher lows are expected.
Prepared by
Harsh Japee, Technical Analyst
GBPJPY Chart
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