GBPJPY holds price action below potential resistance around 136.70 for now and might turn lower from here. Also note that a push higher would see through 137.50 mark before finding resistance again. Bears might remain in control until 139.74 holds.
GBPJPY short term probable wave counts are as follows: The drop from 139.75 through 131.75 can be sub-divided into 5 waves, making an impulse drop. This is labelled as higher degree Wave (1) on the chart here.
Ideally an impulse would be followed by a corrective wave; which should be higher in this case. GBPJPY bulls had managed to produce a counter trend rally towards 136.70 levels, thereafter. It is possible that the currency re-tests 136.70 (Wave (2)), before turning lower again.
Also note that the counter trend rally (corrective wave) had managed to reach fibonacci 0.618 retracement of the previous drop Wave (1), around 136.70 and reversed lower. At the moment, GBPJPY bulls might be poised to test 136.70 again.
Either way, probability remains high for a bearish turn either from current levels, or after pushing through 136.70 mark. A break below 135.00 would confirm that GBPJPY is heading lower towards 128.00 levels going further.
Traders might still remain poised to initiate fresh short positions around 136.50/70, with a protective stop above 139.75. The projected target could be seen towards 128.00, over the next several weeks. Only a break above 140.00 would change the structure for short term.
Technical Analysis Team
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