FX.co ★ GBP/JPY Elliott wave count and Fibonacci levels - January 24, 2011

The GBP/JPY is developing corrective wave 4 of medium term uptrend - colored royal blue in the chart. However the price is very close to the top of wave 3. The targets of the upmove are Fibonacci expansions off 125.47-129.41-128.29, 128.29-132.48-130.65, 130.65-132.24-131.46, 131.46-132.32-131.93.

Resistances:

- 132.44-46 = confluencea rea of two contracted objective points
- 132.79 = objective point (OP)
- 133.05 = OP
- 133.24-32 = confluence area of COP and expanded objective point (XOP)

If the price reverses down the nearest supports will be Fibonacci retracements of the wave up from 130.65 - 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 or its cross below the zero level. The oscillator is now moving up from below the zero level that confirms strength of the market. Therefore longs can be opened on any weakness - levels to watch are 131.68 and 131.49.

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