Trade Idea: EUR/JPY – Sell at 132.40

EUR/JPY – 132.16

Original strategy:

Sell at 133.25, Target: 131.75, Stop: 133.85

Position: –
Target: –
Stop: –

New strategy :

Sell at 132.40, Target: 130.70, Stop: 133.00

Position: –
Target:  –
Stop:-

The single currency continued finding support just above previous support at 131.75 and recovered, suggesting further consolidation would take place and recovery to 132.40-50 cannot be ruled out, however, reckon resistance at 132.77 would limit upside and bring another decline later, below said support at 131.75 would add credence to our view that top has been formed at 134.41 and the fall from there would bring retracement of recent rise to 131.00-05, break there would extend this decline towards support at 130.62 which is likely to hold from here. 

In view of this, we are looking to sell euro on recovery as 132.40-50 should limit upside. Above resistance at 132.77 would risk test of indicated resistance at 133.12 but break there is needed to retain near term bullishness and extend the rebound from 131.75 to previous support at 133.43, however, upside should be limited to 134.00 and price should falter well below said resistance at 134.41, bring further consolidation.  

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i – 105.44, wave ii- 123.33, wave iii – 97.03, wave iv – 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).