Bottom line:  GBPJPY bearish structure continues to remain intact as prices break below 126.50. Any subsequent rallies should be corrective and remain well capped below 148.00 going further.

Technical Analysis:

GBPJPY takes the alternate count presented earlier and breaks below 126.50 levels to complete an impulse lower. Please note that the previous rally between 126.50 and 148.00 was presented in 3 waves, with Wave 3 as an extension. Furthermore, an alternate scenario of prices breaking below 132.00 levels has now materialized. We have re-labelled the counts since 148.00 levels and also adjusted the previous rally as corrective A-B-C that terminated at 148.00 respectively. Looking at the drop since then, we can clearly count 5 waves lower towards 124.08 levels. Going by the general guideline, a corrective rally is expected to materialize towards 138.00 levels at least. Furthermore, only a break above 148.00 would confirm that the trend has reversed for good. Most traders might be looking to remain flat until the corrective rally is complete; while aggressive traders might be willing to initiate fresh long positions (128.58), with protective stops below 124.00 and potential targets at 138.00. Alternately, the recent drop could be the last drop of a larger degree and that the trend might turn to be bullish, going further. A break above 142.80 levels would confirm that a meaningful bottom might be in place around 124.00 levels. The most probable wave count from current levels could be an A-B-C rally towards 138.00 levels, then reversing lower to produce yet another 5 wave drop. The immediate short term wave structure reveals that a lower degree impulse could complete around 129.80 levels and traders might be inclined to buy a corrective drop thereafter. Watch out for an immediate push above 129.80 to be followed by a corrective drop lower.

Prepared by

Harsh Japee, Technical Analyst.

GBPJPY Chart

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