Elliott Wave Daily

Trade Idea: GBP/JPY - Hold long entered at 139.10


GBP/JPY - 139.85

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:

Bought at 139.10, Target: 141.10, Stop: 138.50

Position: - Long at 139.10
Target: - 141.10
Stop: - 138.50

New strategy :

Hold long entered at 139.10, Target: 141.10, Stop: 138.50

Position: - Long at 139.10
Target:  - 141.10
Stop:- 138.90

Sterling found good support at 138.95 and has staged a strong rebound, current firmness adds credence to our view that a temporary low has been formed at 135.60, hence consolidation with mild upside bias remains for this rise from there to bring retracement of recent decline to 140.40-50, then 140.75, however, near term overbought condition should limit upside to 141.10-15 and price should falter well below resistance at 141.75.

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, expect pullback to be limited to 139.50 and reckon 139.00-10 would hold, bring another rise later. Below said support at 138.95 would defer and risk correction to 138.30-35, break there would abort and suggest top is formed instead, bring further fall to 138.00 but downside should be limited to 137.70-75 and price should stay well above 137.00-10, bring another rise later.