Bottom line:  GBPJPY intermediary bearish structure remains until 148.00 is intact. The corrective drop has carved a triangle as Wave B and Wave c could turn lower again.

Technical Analysis:

GBPJPY has been drifting sideways since December 20, 2019 lows at 141.16 levels. We have been calling for an A-B-C corrective drop from 148.00 to complete wave 4, before the last wave rally could resume higher again.  After terminating Wave A at 141.16 earlier, GBPJPY has carved a triangle structure in the past several weeks. This could be labelled as Wave B terminating around 143.30 levels at this point in time. If the above counts hold true, we could expect a sharp reversal lower as Wave C unfolds. The minimum target required for Wave C termination is 139.50/140.00, which is also close to fibonacci 0.382 retracement of Wave 3. Furthermore, also note that previous wave iv also terminated around 139.30 levels. We can then expect a bullish reversal from close to 139.50 and push GBPJPY above 148.00 levels to complete Wave 5. Aggressive traders might be willing to initiate short positions from current levels (143.30), with protective stops above 145.00 and projected targets around the 139.50 mark.  A more conservative trading approach could be to consider remaining flat for now and look for prices to terminate around 139.50. This could be seen as a potential Wave 4 termination of the rally that had begun since 126.50 levels earlier. Traders might be willing to consider longs around 139.50 zone, towards the trend with potential targets above 148.00 going forward. Alternately, a continued drop to 132.00 and lower from here would confirm that GBPJPY has completed its corrective rally at 148.00 and is now underway to print below 126.50 levels, sub dividing into 5 waves.

Prepared by

Harsh Japee, Technical Analyst.

GBPJPY Chart

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