Bottom line: GBPJPY might have completed or terminated its corrective drop since 148.00 levels, around 136.88 for now. A break above 138.68 resistance would confirm the same.
Technical Analysis:
GBPJPY might have finally completed its corrective phase that had begun from 148.00 highs. As discussed earlier, corrective waves could test a trader’s patience and after almost 12 weeks of consolidation, GBPJPY bulls seem to be preparing to take control back. There are several convergences seen here that’s supports the above. 1. Prices have dropped to the Elliott Channel support and bounced back from 136.88 levels. 2. The Fibonacci extension of the corrective wave a, is around 136.88. 3. Prices have retraced around 50% of the larger degree Wave 3 around 136.88 respectively. 4. An engulfing bullish candlestick pattern is seen after hitting 136.88 lows, which could be a potential trend reversal. With all the above facts in place, it might be safe to believe that the a-b-c corrective drop is complete, or very close to completion. Immediate price resistance is seen through 138.68 levels, and a break higher would confirm that a meaningful low is in place around 136.88 levels. Looking into the immediate wave structure, a corrective a-b-c seems to be complete since 148.00 highs, which could be labelled as potential wave 4 here. If the above count is correct, GBPJPY is expected to resume its rally towards 148.00 and higher levels. The overall wave structure since 126.50 remains constructive for bulls until prices stay above the 132.00 mark, going forward. The wave count suggest that Waves 1, 2, and 3 were already in place at 130.69, 126.67 and 148.00 respectively. The recent drop to 136.88 could be termed as Wave 4 and a Wave 5 rally could terminate above 148.00 levels. We would present an alternate count if prices drop below 132.00 going forward. Traders might prepare to go long around these levels.
Prepared by
Harsh Japee, Technical Analyst.
GBPJPY Chart
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