FX.co ★ GBP/JPY Elliott wave count and Fibonacci levels - January 28, 2011

By breaking above 132.48 the GBP/JPY has confirmed wave C of daily degree - colored light green in the chart. But on smaller timeframes the GBP/JPY is developing corrective subwave B - colored orange red in the chart.

The targets of the corrective downmove are Fibonacci retracements of 130.55-132.64, 129.49-132.64.

Supports:

- 131.44-35 = confluence area of .382 and .618 retracements
- 131.07 = .50 ret
- 130.69 = .618 ret

If the uptrend resumes the nearest strategic resistances will be Fibonacci expansions off 125.47-132.48-129.49.

Resistances:

- 133.82 = contracted objective point (COP)

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 to consider long positions. Now the oscillator is below the zero level, quite close to the oversold. It means that now it's the time to wait until the price bounces from a Fib support (131.35 or 131.07) and open longs. In addition the oversold area is 15-30 pips away from the current price, therefore 131.07 would presumably be the exptreme level for the price to reach.

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