Elliot Wave Analysis of GBP/JPY

The Sterling Yen cross has been a big mover in recent weeks, because not only the Pound got thrashed, but the Yen also strengthened simultaneously. Naturally, traders hop on board any trend that is clear! Here is you chart on Sterling Yen (GBP/JPY) with Elliot wave counts and comments written on the chart itself. I wrote it in the morning, when the Pound was at 136.58 and the low for the week was 136.27. (You can see the open/high/low/close data on the top left side of the chart). The first target was 134.60, but we have already been there, even before the Bank of England cut interest rates by 100 bp, and informed the world that “further depreciation in Sterling should moderate impact of global slowdown on UK”. Now if that isn’t an open invitation to stay short of Sterling, what else is? Do you think the BOE will intervene to prop up the Pound after this statement? So use recoveries to every resistance levels to sell the Pound, of course with close stops. A good initial resistance is 140.80 (but there is mild resistance even at 136.50 137.50 levels). We need to be patient because the cross has reached its earliest target, and maybe there will be a bout of profit-taking that will allow us to initiate low risk trades on the short side? Take care. I’m off on holidays for 10 days, but will try and stay in touch with you as often as possible. Enjoy!  Ramki