GBP/JPY – 143.10
New strategy :
Buy at 142.45, Target: 144.45, Stop: 141.85
As sterling opened higher today and broke above previous resistance at 143.00, signaling the rise from 139.35 has resumed and may extend further gain to 143.30-35, break there would encourage for at least a strong retracement of recent decline from 147.75 to 144.00, then 144.45-50, however, near term overbought condition should prevent sharp move beyond 145.00-10 and resistance at 145.30 should remain intact.
In view of this, we are looking to buy sterling on pullback as 142.40-45 should limit downside. Below 142.00 would defer and risk test of 141.80 but only break of 141.30-35 would signal top is formed, bring test of previous support at 141.20 and later towards 140.60-70, however, 140.40 should hold from here.
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 to 116.85 is now treated as wave 5 which also marked the end of larger degree wave (III), hence wave (IV) major correction has commenced for retracement of the wave (III) from 241.38 and upside target at 183.95-00 (50% Fibonacci retracement of the wave (II) from 241.38) had been met, a drop below 160.00 would suggest wave (IV) has ended at 195.85, bring decline in wave (V) for initial weakness to 130 (already met) and 120.