GBP/JPY – 139.90
GBP/JPY – Wave 5 as well as wave (III) has possibly ended at 116.85
As sterling met renewed selling interest at 143.95 earlier this month and bearishness remains for the decline from 148.10 top to extend weakness to 137.50-60, then 136.95-00, however, near term oversold condition should prevent sharp fall below there and price should stay well above support at 135.60, risk from there has increased for a rebound to take place later this month. Looking ahead, a sustained breach below support at 135.60 would signal another leg of decline from 148.45 top is underway for retracement of early upmove to 134.90-00, then towards 134.35-40 (50% Fibonacci retracement of 120.50-148.45) which is likely to hold from here.
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 upside, although initial recovery to 139.40-50 and possibly 140.00 cannot be ruled out, reckon upside would be limited to 140.40-50 and price should alter below 141.50, bring another decline later. Only break of resistance at 142.75-80 would abort and suggest low is formed instead, risk a stronger rebound to 143.10 but price should falter well below resistance at 143.95-00, bring another decline later.
Recommendation: Sell at 141.40 for 138.40 with stop above 142.40.
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.
