FX.co ★ GBP/JPY Elliott wave count and Fibonacci levels - January 6, 2011

GBP/JPY is developing subwave C (colored yellow in the chart) within impulse wave 5 (colored red) of the medium term uptrend. The targets of the upmove are Fibonacci retracements of 133.03-125.47 and expansions off 125.47-127.00-125.74 (waves 1-2), 125.74-128.61-127.37 (waves 3-4), 127.37-128.07-127.46 (subwaves A-B within wave 5)

Resistances:

- 129.25-29 = confluence area of .50 retracement and super expanded objective point (SXOP), already hit (!)
- 129.75 = SXOP
- 130.14-24 = confluence area of .618 retracement and objective point (OP)

If the price reverses down the nearest supports will be Fibonacci retracements of the waves up from 127.37 and from 125.47 - these waves are not developed yet.

Overbought/Oversold

Althought the medium term trend is up the Detrended Oscillator has shown a clear divergence between the peaks of wave 3 and wave 5, the price has hit .50 retracement and SXOP at 129.29, so be ready for a reversal. Now it's preferable to use overbought readings in conjunction with Fib resistances to consider short positions. Resistance zone at 129.25-29 is the one to look for topping signals.

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