GBP/JPY made a second and deeper decline to the low of 136.71 before taking off as expected. The break above minor resistance at 137.83 was the first good indication that red wave iv/ has completed, while a break above resistance at 138.39 will confirm the corrective low and the on-set of a new impulsive rally.
Resistance at 138.39 has only been tested, but we feel comfortable that this resistance will be broken on the next attempt and a rally higher to the next solid resistance at 140.10 is in the cards.
R3: 139.44
R2: 138.90
R1: 138.39
Pivot: 138.17
S1: 137.78
S2: 137.43
S3: 137.13
Trading recommendation:
We bought GBP at 137.45 and we will raise our stop to 136.65