FX.co ★ GBP/JPY Elliott wave count and Fibonacci levels - February 1, 2011

The GBP/JPY is developing potential wave C of medium term uptrend - colored red in the chart. To confirm wave C break above 132.64 is needed, since it's the top of wave A. The targets above the current price level are Fibonacci expansions off 125.47-132.48-129.49, 129.49-132.64-129.75.

Resistances:

- 132.90 = objective point (OP)
- 133.82 = contracted objective point (COP)
- 134.85 = expanded objective point (XOP)

If the price keeps moving down the nearest supports will be Fibonacci retracements of 125.47-132.64, 129.75-131.96, and expansions off 132.64-129.75-131.96.

Supports:

- 131.12 = .382 retracement
- 130.86 = .50 ret
- 130.69 = .618 ret
- 130.17 = COP
- 129.07-06 = confluence area of OP and .50 ret
- 128.21 = .618 ret

Overbought/Oversold

Assuming that the medium term trend is still up it's preferable to use oversold readings of the Detrended Oscillator or its cross below the zero to consider long positions. The oscillator is slightly below the zero, confirming the retracement, the oversold area is 15-30 pips below the current price, therefore wait for a retracement to at least 131.12 (.382 ret) to consider long positions.

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