FX.co ★ GBP/JPY Elliott wave count and Fibonacci levels, October 22, 2010

According to wave count this currency pair is now moving within corrective wave 4 - until 127.33 is broken to the downside.

Pound/yen has just developed wave 132.93-127.33 (wave 3 or C). The wave above 127.33 is considered corrective (4 - colored royal blue in the chart). The tragets of the corrective upmove are Fibonacci retracements of 130.69-127.33, 131.93-127.33.

Resistances:

- 129.41-47 = confluence area of .618 and .382 retracements
- 130.13 = .50 ret
- 130.79 = .618 ret

If 127.33 is broken to the downside the targets below the current price will be Fibonacci expansions off 135.03-130.78-132.93, and 132.93-127.33-129.21, and off still smaller waves 129.21-127.50-128.09

Supports:

- 127.03 = contracted objective point (COP)
- 126.38 = objective point (OP)
- 126.05 = expanded objective point (XOP)
- 125.75 = COP

Overbought/Oversold

The Detrended Oscillator is oscillating around the zero level, confirming the flat. Assuming that the wave above 127.33 is corrective, it's preferable to stand aside or wait for a deep retracement to enter short. Or when the price gets into the overbought - 20-30 pips above the current price.

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