FX.co ★ GBP/JPY Elliott wave count and Fibonacci levels - February 15, 2011

The GBP/JPY is developing corrective subwave B (colored magenta in the chart) within impulse wave C of the medium term uptrend (colored royal blue in the chart). The targets of the correction are Fibonacci retracements of 131.62-134.31, and 132.54-134.31.

Supports:

- 133.28-22 = confluence area of .382 and .618 retracements, already hit (!)
- 132.97 = .50 ret
- 132.65 = .618 ret

If the uptrend resumes the immediate resistances will be Fibonacci expansions off 125.47-132.48-129.49, 129.49-132.64-129.75, 129.75-133.31-131.62, 131.62-134.31-133.24.

Resistances:

- 134.85-90 = confluence area of expanded objective point (XOP) and contracted objective point (COP)
- 135.18 = objective point (OP)

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 level to consider long positions. The oscillator is now above the zero therefore a retracement is needed - the cross below the zero is within 10-15 pips and the oversold area is 30-40 pips away from the current price.

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