FX.co ★ GBP/JPY Elliott wave count and Fibonacci levels - January 4, 2011

The GBP/JPY has developed 5 waves of medium term downtrend. Wave 5 is 128.54-125.47 - colored magenta in the chart. And now this pair is developing corrective wave A, that has A-B-C subwaves, subwave C is still developing - colored red in the chart. The targets of the upmove are Fibonacci retracements of 133.03-125.47, 128.54-125.47 and expansions off 125.47-127.00-125.74, 125.74-126.54-126.02.

Resistances:

- 127.27-31-37 = confluence area of objective point (OP), expanded objective point (XOP) and .618 retracement
- 128.11 = cuper expanded objective point (SXOP)
- 128.22 = XOP
- 128.36 = .382 ret

If the price reverses down the nearest supports will be Fibonacci expansions of the wave up from 125.74 - this wave is not developed yet.

Overbought/Oversold

Assuming that the medium term trend is up it's preferable to use oversold readings of the Detrended Oscillator and a Fib support to consider long positions. The oversold area is 45-55 pips away from the current price - 126.65-55.

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