EUR/JPY – 132.91
The single currency opened higher this week and has resumed recent upmove as euro broke above indicated resistance at 131.71, suggesting the major rise from 109.49 low (2016 low) is still in progress and may extend further gain to 133.50-60 and 134.00-10 but overbought condition should prevent sharp move beyond previous chart resistance at 134.59 and reckon 135.00 would hold on first testing, price should falter below 136.00-10, bring retreat later.
The daily chart is labeled as attached, early selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), hence, wave (C) has possibly ended at 94.12 with a diagonal triangle as labeled in the daily chart, hence upside bias is seen for further gain. Recent rally above indicated retracement level at 116.69 (50% Fibonacci retracement of the intermediate fall from 139.26-94.12) adds credence to this view and signal major reversal has commenced but first leg of this wave C has possibly ended at 149.79, hence wave 2 has commenced with wave A ended at 126.09, followed by wave B at 141.06, wave C commenced and could have ended at 109.49, indicated upside targets at 126.00 and 130.00 had been met and further gain to 135.00 would follow.
On the downside, whilst initial pullback to 132.00-05 is likely, reckon downside would be limited to 131.65-70 and bring another upmove later. Below 131.00 would defer and risk test of support at 130.62 but only break of latter level would suggest top is formed instead, risk weakness to 130.00, however, strong support at 129.37 should remain intact, bring another upmove later this month.
Recommendation: Buy at 132.00 for 134.00 with stop below 131.00.
To re-cap the corrective upmove from the record low of 88.93 (18 Oct 2000), the wave A from there is subdivided as: 1:88.93-113.72, 2:99.88 (1 Jun 2001), 3:140.91 (30 May 2003), 4:124.17 (10 Nov 2003) and 5 ended at record high of 169.97 (21 Jul 2008). The brief but sharp selloff to 112.08 is viewed as a-b-c x a-b-c wave (A) of B. The subsequent rebound to 139.26 is (B) of B and (C) of (B) has possibly ended at 94.12 and in any case price should stay well above previous chart support at 88.93, bring rally in larger degree wave C towards 150.00.
