GBP/JPY Elliott Wave Analysis

GBP/JPY – 136.13

GBP/JPY – Wave 4 correction from 118.87 has ended at 163.00

Although sterling rebounded after early fall to 132.05, as the price action from there still looks corrective in nature, suggesting recent decline in wave iii would resume after consolidation and below last week's low at 133.95 would suggest correction is over, bring resumption of decline for retest of 132.05 later. Break there would extend weakness to chart support at 131.49, then 130.00 but sterling is likely to stay above 127.00 (100% projection of wave i).

Our preferred count is that larger degree wave V with circle is unfolding from 251.12 with wave (I) 219.34, (II): 241.38 and wave (III) is subdivided into 1: 192.60, 2: 215.89 (23 Jul 2008) and wave 3 ended at 118.87 earlier in 2009. The correction from there to 162.60 is wave 4 which itself is a double three and is labeled as first a-b-c ended at 151.53, followed by wave x at 139.03, 2nd a ended at 162.60, 2nd b at 146.75 and 2nd c leg of wave 4 ended at 163.00. Therefore, the decline from 163.00 is the beginning of wave 5 with minor wave i of 5 has ended at 139.30 followed by wave ii at 150.70 (as indicated in our previous update with a: 149.10, b: 142.05 and c at 150.70).

On the upside, above last week's high at 138.05 would bring stronger retracement to 139.17 (38.2% Fibonacci retracement of 150.70 to 132.05) and possibly to 141.38 (50% Fibonacci retracement), however, price should falter well below resistance at 143.60/65 and bring another decline later.

The long-term downtrend from 570.99 (29 Feb 1980) is labeled as an impulsive wave with III with circle ended at 129.77 (20 Apr 1995) and the corrective rebound to 251.12 (20 Jul 2007) is treated as wave IV with circle and the wave V with circle selloff from 251.12 is still unfolding and will bring another test of 118.87 low, possibly in Q4, however, further steep fall below there is unlikely and 115.00 shall contain downside.