Trade Idea: GBP/JPY – Sell at 143.65 or buy at 142.20

GBP/JPY – 143.05

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 up

Original strategy:

Sell at 143.65, Target: 141.65, Stop: 144.25

Position: –
Target: –
Stop: –

New strategy :

Sell at 143.65, Target: 141.65, Stop: 144.25

O.C.O.

Buy at 142.20, Target: 143.70, Stop: 141.60

Position: –
Target:  –
Stop:-

Although sterling fell briefly to 141.50 yesterday, the subsequent rebound suggests consolidation above this level would be seen and recovery to 143.65-70 cannot be ruled out, however, reckon 144.00-10 would limit upside and bring another decline later. Below said support at 141.50 would extend the selloff from 148.10 top to 141.00, however, loss of momentum should limit downside to 140.50-55 and price should stay above psychological support at 140.00, bring rebound later. 

In view of this, whilst we are still looking to sell on further recovery, we would also buy sterling on dips but one should exit on such rebound. Above 144.00 would risk a stronger rebound to 144.50 but upside would still be limited to 145.00 and price should falter well below said resistance at 145.45, bring another decline 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.