GBP/JPY – 142.95
New strategy :
Stand aside
Position: –
Target: –
Stop:-
Sterling found support at 142.00 yesterday and has rebounded again, retaining our view that a temporary low has possibly been formed at 141.25 on Friday, hence further consolidation above this level would be seen and upside risk remains for another rebound to 143.35-40, break there would add credence to this view, bring retracement of recent decline to 144.00 (previous support turned resistance), however, reckon upside would be limited to 144.45-50 and 144.70 should hold, price should falter well below strong resistance at 145.30, bring another decline later.
On the downside, below indicated support at 141.95-00 would bring retest of said last week’s low at 141.25, however, break there is needed to revive bearishness and signal recent decline has resumed and extend weakness to 140.80-85 (1.618 times projection of 147.75-144.05 measuring from 146.80) but oversold condition should prevent sharp fall below 140.50 and reckon psychological support at 140.00 would hold from here. As near term outlook is mixed, would be prudent to stand aside for now.
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.
