GBPJPY has been in a down trend since 148.00 levels (not seen on the chart here). The currency had carved an interim low around 124.50 in March 2020 before producing a counter trend rally, which seems to have terminated around 139.75 levels. If the down trend has resumed, GBPJPY bears should remain poised to push lower towards 124.50 and beyond.
Looking at the recent wave structure displayed on the hourly chart, GBPJPY might have resumed its drop since printing 139.75 highs on June 05, 2020. The drop between 139.75 through 131.75 has unfolded into 5 waves. The termination has been labelled as a higher degree Wave (1) on the chart here.
Since printing lows at 131.75, the GBPJPY pair has been producing a counter trend rally marked as potential a-b-c. The counter trend rally is expected to terminate around 134.90-135.70 as highlighted here. Please also note the fibonacci convergence between the trend and counter trend on the chart here. The fibonacci 0.50 retracement of the precious drop is converging with fibonacci 1.618 extension of the counter trend.
If prices manage to reach the above convergence, we can expect a bearish bounce around 135.70 and GBPJPY could resume lower again. The currency is expected to drop sharply below 0.6775 levels and proceed towards 124.50, as Wave (3) progresses.
Most traders might be preparing to initiate fresh short positions around 137.50 mark, with stop above 140.00 and projected targets towards 124.00 respectively. Only a break above 140.00 in a consistent manner, would change the outlook.
Technical Analysis Team
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