GBP/JPY – 148.40
New strategy :
Buy at 148.00, Target: 149.70, Stop: 147.60
Although sterling met resistance at 148.95 on Friday and has retreated, as outlook remains consolidative, reckon downside would be limited to 148.00 and as long as indicated support at 147.65 (last week’s low) holds, prospect of another rebound remains, above said resistance at 148.95 would bring subsequent bounce to 149.45-55, however, reckon resistance at 149.70 would cap upside and bring retreat later. Only a break above this level would signal the fall from 151.90 top has ended and bring further subsequent gain to 150.00 resistance, then towards another previous resistance at 150.30 which is likely to hold from here.
In view of this, we are looking to buy sterling on dips. Below said support at 147.65 would signal the erratic decline from 151.90 top has resumed and bring retracement of early rise to support at 147.30, then 146.90-00 but oversold condition should limit downside to 146.40-50, 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.