Trade Idea: GBP/JPY – Buy at 144.50

GBP/JPY – 146.35

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 down

Original strategy:

Buy at 144.30, Target: 146.30, Stop: 143.70e

Position: –
Target: –
Stop: –

New strategy :

Buy at 144.30, Target: 146.30, Stop: 143.70

Position: –
Target:  –
Stop:-

Although sterling has risen again and recent upmove may extend further gain to 147.10 (previous resistance), loss of near term upward momentum should prevent harp move beyond 147.50-60 and price should falter below recent high at 148.10, risk from there is seen for a retreat later. Below 145.65-70 would bring pullback to 145.10-15, however, downside should be limited to 144.50-60 and bring another upmove later.

In view of this, would not chase this rise here and we are looking to buy sterling on subsequent pullback as previous resistance at 144.20 should limit downside and bring another rise. Below 143.90-00 would defer but only break of support at 143.30 would signal top is formed instead, bring correction to 142.90-00. 

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.