Pound/yen is moving within wave 5 of the long term downtrend – colored royal blue in the chart. The strategic targets of the downside movement are Fibonacci expansions off 135.03-130.78-132.93 (waves 1-2), 132.93-127.33-129.21 (waves 3-4), and 129.21-127.07-127.86 (minor waves in wave 5).
– 126.54 = contracted objective point (COP)
– 126.05 = expanded objective point (XOP)
– 125.75-72 = confluence area of COP and objective point (OP)
In case the price does not break below 127.07 and reverses up for a correction the nearest resistances will be Fibonacci retracements of 129.21-127.07.
– 127.89 = .382 retracement
– 128.14 = .50 ret
– 128.39 = .618 ret
The Detrended Oscillator is in the oversold. Assuming that the prevailing trend is down now is not the time to enter short. It’s preferable to wait for a retracement to a Fib resistance (see listed above) or when the price gets into the overbought area – 30-40 pips to go.
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