GBPJPY Carves Potential Wave 2 Around 135.60

09 July 2020

GBPJPY has rallied since the beginning of this week as expected and pushed through 135.60 highs until today. Please note that fibonacci 0.618 extension is pointing towards 135.70/75 as Wave (2) potential termination. The currency is expected to resume lower anytime soon.

Let us have a look at potential wave counts since 139.75 highs. The drop between 139.75 through 131.75 can be sub divided into 5 waves, hence impulse. The termination at 131.75 has been labelled as a higher degree Wave (1).

As discussed earlier, an impulse wave (5 waves), is usually followed by a corrective wave (3 waves), in the opposite direction. GBPJPY has produced a corrective wave since 131.75 lows, labelled as a-b-c, which potentially terminated around 135.60 mark.

The termination has been marked as Wave (2) of the same degree. Also note that Wave (2) has rallied through the fibonacci 0.50 retracement of Wave (1), around 135.74. It has remained shy by a few pips before reversing lower again.

If the above larger degree wave counts hold true, GBPJPY should stay below 135.60/75 potential swing high and continue lower towards 131.75 levels at least. The fibonacci 0.618 extension of Wave (1) drop is pointing towards 126.90 (not seen here.)

Also note that probability remains for GBPJPY to push through 135.75 and terminate Wave (2) around 126.30 levels before reversing lower again. Overall, GBPJPY remains a good candidate to be sold on rallies as long as prices stay below 139.75, going further.

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