Trade Idea: GBP/JPY – Buy at 141.60

GBP/JPY – 142.45

Original strategy:

Bought at 141.60, Target: 143.60, Stop: 141.00

Position: – 141.60
Target: – 143.60
Stop: – 141.00

New strategy :

Hold long entered at 141.60, Target: 143.60, Stop: 141.60

Position: – Long at 141.60
Target:  – 143.60
Stop:- 141.60

Although the British pound retreated after meeting resistance at 142.90 yesterday, as sterling did find renewed buying interest at 141.55-60 (we recommended to buy at 141.60 and a long position was entered) and has rebounded, retaining our bullishness and mild upside bias remains for another test of said resistance, break there would add credence to our view that recent decline has ended at 139.35 and bring at least a strong retracement of recent decline to 143.20 and then 143.50-60, however, near term overbought condition should limit upside and reckon 144.00-10 would hold from here. 

In view of this, we are holding on to our long position entered at 141.60. Below said support would risk test of previous resistance at 141.40, break there would defer and risk weakness to 141.00 but reckon downside would be limited to 140.40-45, price should stay well above support at 140.05 and bring another rebound later. 

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.