EUR/JPY – 121.01
EUR/JPY: Wave v as well as larger degree wave (C) ended at 94.11 and first leg of larger degree wave C upmove has possibly ended at 149.79 and wave 2 correction has possibly ended at 109.49.
The single currency opened sharply higher this week and rallied to as high as 121.98, signaling low has been formed at 114.85 early last week and consolidation with mild upside bias is seen for further gain to 122.25-30, then test of resistance at 122.89, however, a daily close above this level is needed to signal recent entire correction from 124.10 has ended at 114.85, bring further gain to 123.31. Looking ahead, only a sustained breach of 123.31 would retain bullishness and signal early rise from 109.49 low has resumed for retest of 124.10, break there would extend this move to 124.65, then 125.25-30 (50% Fibonacci retracement of 141.06-109.49) but resistance at 126.47 should hold from here.
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, above 125.00 would add credence to this view.
On the downside, whilst initial pullback to 120.00-10 cannot be ruled out, reckon downside would be limited to 119.40-50 and bring another rise later to aforesaid upside targets. Below 118.90-95 would defer and risk weakness to 118.00-10 but only a break below previous resistance at 117.82 would abort and signal top is formed instead, risk weakness to 117.30, then 116.90-00 but support at 116.46 should remain intact.
Recommendation: Buy at 119.50 for 122.00 with stop below 118.50.
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.
