FX.co ★ GBP/JPY Elliott wave count and Fibonacci levels, September 27, 2010

This currency pair is now trading in the flat limited by 131.70-133.75. The breakout of the flat will show the future direction of the med term trend. According to wave count the last leg up is considered a corrective wave to the downside impulse 135.03-131.70. The targets of this corrective movement are Fibonacci retracements of 135.03-131.70 and expansions off 131.70-133.75-132.32.

Resistances:

- 133.59 = contracted objective point (COP)
- 133.76 = .618 retracement
- 134.37 = objective point (OP)
- 135.64 = expanded objective point (XOP)

In case the flat is broken out to the downside the targets below the current price will be Fibonacci retracements of 127.62-135.03, and expansions off 135.03-131.70-133.75, 133.75-132.32-133.62.

Supports:

- 132.74 = COP
- 132.19 = OP
- 131.69 = COP
- 131.32-31 = confluence area of .50 ret and XOP
- 130.45-42 = confluence area of .618 ret and OP

Overbought/Oversold

The Detrended Oscillator is now oscillating around the zero line, confirming the med term flat. Assuming that the prevailing trend is down, it's advisable to seek for topping signals against one of the Fibonacci resistances listed above or when the price gets into the overbought area - 30-40 pips above the current level.

Read more on how to apply Fibonacci studies to calculate price targets.