Elliott Wave Daily

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


GBP/JPY - 139.55

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:

Bought at 139.10, Target: 141.10, Stop: 138.50

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

New strategy :

Exit long entered at 139.10,

Position: - Long at 139.10
Target:  -

As sterling has retreated after rising to 140.35 yesterday, suggesting consolidation below this level (a minor wave iii) would be seen, hence downside risk is for pullback to 138.75 (38.2% Fibonacci retracement of 136.15-140.35), however, reckon downside would be limited to 138.25 and price should stay well above 137.75-80 (61.8% Fibonacci retracement) and bring another rise later.

In view of this, would be prudent to exit long entered at 139.10 and stand aside for now. Above 140.10-15 would bring retest of 140.35 but break there is needed to extend the rise from 135.60 to 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.