Bottom line: GBPJPY remains structurally bearish until prices stay below 148.00. The pair is retracing its recent drop between 148.00 and 124.00 levels and might have completed its first leg at 133.82 respectively.
Technical Analysis:
GBPJPY remains in control of bears in the medium term, as prices still hold below the 148.00 resistance. Please note that the previous rally touched 148.00 mark on December 13, 2019, and since then GBPJPY has been forming lower lows and lower highs.
Also note that the drop between 148.00 and 124.00 has been an impulse (5 waves). A corrective rally was expected as it was discussed last week. At this point in writing, prices have managed to rise through 133.82 levels (yesterday), and found interim resistance. The recent rally could be the first wave of the expected corrective rally, as it has tested fibonacci 0.382 retracement of the earlier drop.
Intraday drop could be seen towards 129.00/130.00 levels at least, as GBPJPY carves the second wave of corrective phase. Most traders might be willing to initiate aggressive long positions around 130.00 mark, with a protective stop below 124.00 and projected targets above 138.00 respectively.
Please note that fibonacci 0.618 retracement of the drop between 148.00 and 124.00 is seen around 138.80 levels. The counter trend rally discussed above is expected to terminate around the convergence zone 138.00/80 levels.
A bearish reversal might remain high probability around 138.00/139.00 levels when most traders might be willing to initiate short positions. A protective stop might be above 148.00 mark with projected targets below 124.00 respectively.
Overall, GBPJPY is expected to produce a counter trend rally towards 138.00/139.00 levels and then might turn bearish again. Trading opportunities are seen on both sides and traders might position according to their respective risk aptitudes.
Prepared by
Harsh Japee, Technical Analyst.
GBPJPY Chart
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