Trade Idea: GBP/JPY – Hold short entered at 143.65

GBP/JPY – 143.55

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:

Sold at 143.65, Target: 141.65, Stop: 144.25

Position: – Short at 143.65
Target: – 141.65
Stop: – 144.25

New strategy :

Hold short entered at 143.65, Target: 141.65, Stop: 144.00

Position: – Short at 143.65
Target:  – 141.65
Stop:- 144.00

Although sterling edged higher to 143.95, as price has retreated after meeting resistance there, suggesting as long as this level holds, consolidation with mild downside bias would be seen and weakness to 143.00, then 142.50-55 would be seen, however, break of latter level is needed to signal the rebound from 141.50 has ended, bring another fall towards this level. Looking ahead, below said support at 141.50 would extend the selloff from 148.10 top to 141.00 but 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, we are holding on to our short position entered at 143.65. Above 143.95-00 would risk a 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.