Trade Idea: GBP/JPY – Buy at 141.30

GBP/JPY – 142.45

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 down

Original strategy:

Buy at 141.45, Target: 143.45, Stop: 140.85

Position: –
Target: –
Stop: –

New strategy :

Buy at 141.30, Target: 143.30, Stop: 140.70

Position: –
Target:  –
Stop:-

As sterling has maintained a firm undertone and indicated resistance at 142.50 was penetrated, adding credence to our bullish view that the erratic rise from 138.70 is still in progress for test of indicated previous resistance at 142.75, above there would signal recent decline has ended and encourage for at least a strong retracement of recent selloff to 143.05-10, then 143.50 but price should falter below previous resistance at 143.95.

In view of this, we are looking to buy sterling on subsequent pullback as support at 141.35 should limit downside and bring another rise. Below 140.95 would risk weakness to 140.45-50 but only break there would signal the rebound from 139.85  has ended bring another test of this level first. Looking ahead, only break there would suggest the aforesaid erratic rise fro 138.70 is over, bring further fall to 139.15 support first. 

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.