GBP/JPY – 139.80
GBP/JPY – Wave 5 as well as wave (III) has possibly ended at 116.85
Although sterling extended recent decline to as low as 135.60, the subsequent rebound suggests low has possibly been formed there and gain to 140.10 is likely, however, a daily close above 140.60-65 is needed to add credence to this view, bring further gain to 141.75-80 and then 142.00 but only a sustained break above resistance at 142.80 would retain bullishness and signal recent fall from 148.45 has ended, then headway to 143.50-60 would follow but resistance at 144.75-80 should remain intact.
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.
On the downside, whilst pullback to 139.00-10 is likely, reckon downside would be limited to 138.50-60 and renewed buying interest should emerge around 138.00, bring another rise later. Below previous minor resistance at 137.10 would abort an risk weakness to 136.10-15 but said support at 135.60 should remain intact. Only break there would abort and signal the erratic fall from 148.45 is still inn progress for weakness to 135.00, then 134.45-50 (50% Fibonacci retracement of 120.50-148.45).
Recommendation: Buy sterling at 138.00 for 141.00 with stop below 137.00.
The long-term downtrend from 570.99 (29 Feb 1980) is labeled as an impulsive wave with III with circle ended at 129.77 (20 Apr 1995) and the corrective rebound to 251.12 (20 Jul 2007) is treated as wave IV with circle and the wave V with circle selloff from 251.12 has possibly ended at 116.80 (almost reached our indicated target at 116.00) and major correction has commenced from there and indicated upside target at 183.90-00 (50% Fibonacci retracement of 251.10-116.85) had been met, reckon upside would be limited to 199.80-90 (61.8% Fibonacci retracement) and bring wave (V) decline in later part of 2017.