Bottom line:  GBPJPY bearish structure continues to remain intact until prices stay below 148.00 levels going forward. It is looking to resume lower towards 139.50 at least, as Wave c unfolds.

Technical Analysis:

GBPJPY carves a flat Wave b at 144.60 levels yesterday after moving sideways for almost 4 weeks since December 23, 2019. We had argued the case last week that a corrective a-b-c could be underway towards 139.50 at least. Within the corrective structure, Wave b has unfolded as an expanded flat terminating around 144.60. If the above counts are correct, we can expect a sharp drop towards 139.50, as Wave c unfolds. Looking at the overall wave structure since 126.50 lows on August 12, 2019, the GBPJPY seems to have rallied in 3 waves towards 148.00. Wave 1 terminated at 130.69, Wave 2 at 126.67 and Wave 3 unfolded as an extended wave sub dividing into 5 wave terminating at 148.00 respectively. The recent drop from 148.00 could be unfolding towards 139.50 levels as Wave 4; or a bearish reversal towards below 126.50. In either case, we can expect a drop from current price (143.59) towards 139.50 at least. Hence it is safe to remain short with protective stop at 148.00, with potential targets towards 139.50/140.00 levels respectively. As described above, an alternate count could be Wave 1 and 2 terminating at 141.16 and 144.60 respectively. If the alternate count is true, we could expect Wave 3 drop towards 133.60 as GBPJPY prepares to sub divide into 5 waves. At this point, it is too early to project a bearish turn below 126.50 but a consistent break below 139.00 should be taken as strong probability. Watch out for a bearish turn towards 139.50 levels as immediate short term probability. Shall observe price action there, to decide further direction.

Prepared by

Harsh Japee, Technical Analyst.

GBPJPY Chart

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