FX.co ★ Elliott wave analysis of GBP/JPY for September 22, 2020

The break below 135.92 yesterday was a deal-breaker. It means that the decline from 142.72 couldn't be a red wave iv/ as red wave i/ and red wave iv/ isn't allowed to overlab. So we have been back to the drawing table looking for alternates count. Currenctly, the pair is declining from 142.72 as being a wave ii/ in a series of waves one's and two's. Under this count, the ongoing wave ii/ can't break below the start of a wave i/ at 131.68.

In the short-term, we will be looking for a final dip to just below 133.51 to complete wave ii/ and set the stage for a new impulsive rally in wave iii/. A break above minor resistance at 134.55 will be the first indication that wave ii/ has completed, while a break above resistance at 135.33 will confirm wave 2/ being completed and wave iii/ in motion.

R3: 136.00

R2: 135.39

R1: 134.55

Pivot: 134.09

S1: 133.55

S2: 132.85

S3: 132.39

Trading recommendation:

We will buy GBP at 133.51 or upon a break above 134.55. If we are able to buy at 133.55 our stop will be placed at 133.00