EUR/JPY Elliott Wave Analysis

EUR/JPY – 124.17

EUR/JPY: Wave 2 correction from 139.26 is still unfolding and may fall to 119.00

As the single currency continued to edge higher after rebounding from 119.66, suggesting a test of resistance at 125.24 would be seen, however, a daily close above there is needed to signal the c leg has ended at 119.66 earlier and rebound to 126.95/00 would follow, break there confirm, then rise to 128.00 would be seen.

Our preferred count remains that the upmove from 112.08 is wave 1 of C has ended at 139.26 with minor wave iii ended at 137.42, followed by triangle wave iv at 126.98, then wave v at 139.26. The move from there is wave 2 and is unfolding as a triple three,. abc-x-abc-x-abc, and is labeled as: first set of a-b-c ended at 127.00, then x wave at 138.72, followed by second set of a-b-c at 129.02, then another x wave at 138.49 with the third set of a-b-c marked as: a-126.95, b-134.37 and the c leg has either ended at 119.66 or may extend one more fall to 118.40/45 but 116.75/80 should hold.

On the downside, whilst pullback to 123.00 cannot be ruled out, reckon 122.00 should hold. Only below this week's low at 121.46 would shift risk back to downside for weakness to 120.50 and then retest of 119.66. A break below there would extend one more fall in wave v of c towards 119.00, however, reckon this minor wave v would be limited to 118.41 (50% projection of 134.37-120.70 measuring from 125.24) and price should stay well above 116.79 (61.8% projection level), bring a strong rebound later this month.

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 B. The subsequent rally from 112.08 showed impulsive structure, therefore, we labeled it as wave 1 of C.

The long-term downtrend started from calculated price of 359.26 (Dec 1979). The sharp fall from there to 226.60 (Aug 1981) with impulsive structure is labeled as wave I and wave II was capped at 256.59 (Nov 1982). Wave III decline was contained at 140.58 (Feb 1989), the subsequent rebound to 198.59 (Aug 1990) is seen as wave IV, the subsequent 5-wavers decline from there finished at 88.93 (18 Oct 2000). The strong rebound from there to 169.97 (21 Jul 2008) is tentatively viewed as wave A and wave B selloff was followed and is possibly ended at 112.08 (21 Jan 2009). Our alternate count is that entire wave IV correction already ended at 169.97, hence fall to 112.08 would be treated as the wave 1 of V.