Trade Idea: EUR/JPY – Sell at 133.25

EUR/JPY – 132.67

Original strategy:

Sell at 133.25, Target: 131.75, Stop: 133.85

Position: –
Target: –
Stop: –

New strategy :

Sell at 133.25, Target: 131.75, Stop: 133.85

Position: –
Target:  –
Stop:-

As the single currency staged a rebound after finding support at 131.75 earlier this week, suggesting consolidation above this level would be seen and corrective bounce to 133.00 cannot be ruled out, however, if our view that top has been formed at 134.41 is correct, upside would be limited to 133.25-35 and bring another decline later, below said support at 131.75 would extend the fall from 134.41 to 131.50, then 131.00-05, break there would bring retracement of recent upmove towards support at 130.62 which is likely to hold from here. 

In view of this, we are looking to sell euro on further subsequent recovery as 133.25-35 should limit upside. Above previous support at 133.43 would abort and suggest at least first leg of decline from 134.41 has ended, bring a stronger rebound to 133.90-00 but still reckon said resistance at 134.41 would remain intact, 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).