GBP/JPY – 142.40
Recent wave: Medium term low formed at 120.50 and (A)-(B)-(C) major correction has commenced with (A) leg ended at 148.45, hence wave (B) is unfolding for retreat to 131.00-10.
Trend: Near term up
New strategy :
Sterling’s rebound from 140.75 turned out to be stronger than expected, suggesting consolidation above this level would be seen and test of resistance at 143.10 cannot be ruled out, however, break there is needed to signal low has been formed there, bring retracement of recent decline towards resistance at 143.95-00 which is likely to hold from here.
On the downside, expect pullback to be limited to 141.50-60 and price should stay above 141.00, bring another rebound later. Below 141.00 would bring retest of 140.75 but break there is needed to signal recent decline has resumed and extend weakness to 140.50, then towards psychological support at 140.00, however, oversold condition should prevent sharp fall below previous support at 139.20, risk from there has increased for a rebound later.
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.