Daily Technical Update May 20, 2010 GBP/JPY in Wave V Extension?
- 1H: Following yesterday's GBP/JPY update, the bearish continuation attempt materialized.
- After the post, the market rallied a bit further, to the 61.8% retracement. The then-noted negative reversal became invalid, but another one formed. The RSI is higher on 5/19 than 5/18, but price action was not.
- This suggests a swing projection, targeting 128.20.
- This is the target for this swing, but let's look at the 4H time-frame to see a count for the swing that started at the end of April.
- 4H and Daily: The 4H chart shows a possible wave count for the decline that started April 26.
- The practical thing about this count is the wave V proportion to wave III. It is already no longer a truncated fifth. Instead, it may head to 125.00 area.
- This would be a wave III equivalence.
- There can be some short-term support here.
- However, another scenario exists if the market breaks below 125. Since Wave III>Wave I and Wave V> Wave III, then this is an extended fifth.
- The Daily chart shows a 200% expanded retracement at the 119.50 level, which is near the 138.2% extension. This 119.50 level may be the ultimate target of this extended wave V.
- This scenario however should not be seriously considered until a break below 125.00. Note that this 125.00 area in the daily is the approximately a 161.8% expanded retracement.
- It should be noted that as the market accelerates its fall, it is creating the proper dynamics for an Extended Wave V.
Fan Yang Currency Analyst Commodity Trading Advisor