Daily Technical Update May 20, 2010  GBP/JPY in Wave V Extension? dtu_052010_gbpjpy1ha  

  • 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.

dtu_052010_gbpjpy4h

  • 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