GBP/JPY – 149.55
New strategy :
Sell at 150.20, Target: 148.20, Stop: 150.80
Although sterling has rebounded after finding support at 148.70 last week and consolidation above this level would be seen, as the selloff from 151.90 suggests temporary top is possibly formed there, reckon upside would be limited to 150.20-30 and bring another decline later, below said support would add credence to this view, bring retracement of recent rise to 148.00-10, then towards previous support at 147.80 but another support at 147.30 should hold from here.
In view of this, we are looking to sell sterling on further recovery as 150.20-25 should limit upside. Above previous support at 150.60-65 would defer and risk a stronger rebound to 151.10-20, however, still reckon upside would be limited to 151.55-60 and price should falter well below said resistance at 151.90 (last week’s high), bring another retreat 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.