GBP/JPY – 144.85
GBP/JPY – Wave 5 as well as wave (III) has possibly ended at 116.85
Sterling has surged again after brief pullback and indicated previous resistance at 144.75 was penetrated, adding credence to our bullish view that the correction from 148.45 has ended at 135.60 (B leg trough) last month, hence upside bias remains for the rebound from there to extend gain to 145.40-50, then 146.35-40 but near term overbought condition should prevent sharp move beyond 147.40-50 and price should falter well below said resistance at 148.45 (A leg top), bring 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.
On the downside, whilst pullback to 144.00-10 is likely, reckon downside would be limited to 143.00 and renewed buying interest should emerge above 142.50-60, bring another rise later. Below previous minor resistance at 142.10-15 would defer and risk correction to 141.50, then 141.00 but price should stay above another previous resistance at 140.35 and bring another rise later to aforesaid upside targets.
Recommendation: Buy sterling at 142.85 for 144.85 with stop below 141.85.
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.
