GBP/JPY – 142.45
Exit short entered at 142.00
New strategy :
Buy at 141.60, Target: 143.60, Stop: 141.00
As the British pound has surged again after staging a strong rebound from 139.35 (last week’s low), suggesting recent decline has ended there and consolidation with mild upside bias is seen for this move to bring at least a strong retracement of recent decline, hence further gain to 143.20 would be seen, however, near term overbought condition should limit upside to 143.50-60 and reckon 144.00-10 would hold from here.
In view of this, would be prudent to turn long on pullback as 141.50-60 should limit downside. Below previous resistance at 141.40 would defer and risk weakness to 141.00 but reckon downside would be limited to 140.40-45, price should stay well above support at 140.05 and bring another 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.