Elliott Wave Daily

Trade Idea: GBP/JPY - Stand aside


GBP/JPY - 143.90

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 144.50, stopped at 143.90

Position: - Long at 144.50
Target: -
Stop: - 143.90

New strategy :

Stand aside

Position: -
Target:  -

Sterling’s retreat from 148.10 turned out to be stronger-than-expected, dampening our bullishness and suggesting a temporary top has been formed there, hence downside risk is seen for the corrective fall from there to bring retracement of recent upmove, hence weakness to 143.20-30 and then 142.90-00 cannot be ruled out, however, reckon downside would be limited to 142.50 and price should stay above 142.00, bring another rise later.

In view of this, would be prudent to stand aside for now. Above 144.80-85 would bring recovery to 145.50 but only break of resistance at 145.90-95 would signal low is formed, then gain to 146.40-50 would follow, having said that, sterling needs to penetrate resistance at 147.10 to revive bullishness and signal correction from 148.10 has ended, bring eventual retest of this level.

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.