GBPJPY might have carved a lower high around 135.92 levels over the last week and turned lower towards 126.00 levels, going forward. The currency is trading around 134.28 levels as we prepare to publish and a break below 132.00 would accelerate the drop.
The potential wave lower degree wave counts since 139.75 are as follows. GBPJPY had dropped from 139.75 through 131.75 levels, sub-dividing into 5 waves. The structure is not an impulse wave but could be a leading diagonal, which is a motive wave, Wave (1) here.
As discussed earlier, a motive wave is usually followed by a correct wave in the opposite direction. The GBPJPY currency pair then produced a corrective rally a-b-c towards 135.92 mark, which has been labelled as Wave (2) here.
Also note that the corrective wave has managed to reach fibonacci 0.50 retracement of the earlier drop from 139.75 through 131.75 respectively. High probability remains for the next big wave to drop lower towards 128.00 and 126.00 levels respectively.
GBPJPY might be unfolding as 5 waves lower from 139.75 or might at least produce a corrective drop towards 126.00 levels respectively. Either way, the currency is set to drop lower from here, until 139.75 intermediary resistance holds.
Also note that GBPJPY has reversed from a fibonacci convergence around 135.70/90 as highlighted on the chart here. If the above proposed wave structure holds well, GBPJPY should ideally remain below 135.92 and continue drifting lower towards 128.00 and 126.00 respectively.
Technical Analysis Team
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