FX.co ★ GBP/JPY Elliott wave count and Fibonacci levels, September 16, 2010

According to wave count this currency pair has just developed wave C of the daily downtrend and thus the whole downside movement from 137.75 (weekly wave A) is over. The current upside movement is considered weekly corrective wave B. Within this wave we have a set of 5 waves of smaller degree (colored yellow).

The targets of the upside movement are Fibonacci retracements of 137.75-127.62, and expansions off 127.62-129.48-128.61 (waves 1-2, yellow), and 128.61-132.78-131.79 (waves 3-4, yellow).

Resistances:

- 133.88 = .618 retracement; reached already (!)
- 134.37 = contracted objective point (COP)
- 135.96 = objective point (OP)

In case the pair reverses down for a correction the nearest supports will be Fibonacci retracements of 131.79-134.01 and 127.62-134.01.

Supports:

- 132.90 = .50 ret (minor)
- 132.64 = .618 ret (minor)
- 131.57 = .382 ret (major)
- 130.82 = .50 ret (major)
- 130.06 = .618 ret (major)

Overbought/Oversold

The Detrended Oscillator is in the oversold area. Assuming that the prevailing trend is up it's advisable to look for bottoming signals that happen near said Fib-supports and enter long. Or you can use the oversold state as the first indication of a bottom.