GBPJPY might be preparing to resume lower again after testing 136.70 levels. The currency pair has managed to print above the projected 135.70 levels earlier. Bears are looking to get back in control and push lower towards 128.00.
GBPJPY probable lower degree wave counts are as follows. The currency pair had managed to reach up to 140.00 levels earlier, which is marked as potential resistance if the previous drop between 148.00 and 124.00 respectively.
The drop from 139.74/140.00 through 131.75 can be subdivided into 5 waves. The above drop is not an impulse but a leading diagonal, which is again a motive wave. Ideally a motive wave is followed by a corrective wave in the opposite direction.
GBPJPY seems to have produced a corrective wave/rally between 131.75 and 136.70 as shown on the 4H chart here. The earlier drop has been labelled as Wave (1) while the corrective rally is marked as Wave (2) for now.
Also note that the corrective rally has reached up to fibonacci 0.618 retracement of the earlier drop. High probability remains for a potential bearish reversal here, and a break below 135.30 confirms that bears are back in control.
Most traders might be preparing to initiate fresh short positions around current levels 136.53, with a stop loss above 140.00 and projected targets below 128.00, going forward. Only a break above 140.00 would change the short term structure.
Technical Analysis Team
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