Following up on EUR/JPY short (sold at 128.60, stop at 127.45). Last post here. EUR/JPY’s fall to 125.13 and rebound from there today was much quicker than we thought. 161.8% projection of 131.13 to 128.49 from 129.44 at 125.16 was just met but there was no follow through selling. And we actually missed quite a good opportunity to get out and re-sell. Nonetheless, the position short trade is still doing alright.
Based on strong downside momentum, fall from 131.13 is seen as a five wave impulsive move. Rebound from 125.13 should form part of a wave four consolidation pattern. Then there will be another decline to complete the five wave sequence. We’d expect upside of the corrective rise from 125.13 to be limited by 127.40 resistance. This level is close to 38.2% retracement of 131.13 to 125.13, as well as 50% retracement of 129.44 to 125.13.
So, we’ll keep the stop at 127.45. Meanwhile, firstly, a wave four consolidation in this case may take quite some time to develope. And the subsequent downside potential could be limited considering that it’s already close to 124.61 low. Therefore, we’ll close the short position on a dip to 126.00.
