Trade Idea: EUR/JPY - Sell At 131.50, O.C.O. Buy At 129.20

EUR/JPY – 130.18

Recent wave: wave 2 is unfolding as a triple threes and possibly ended at 126.95

Trend: Sideways

Original strategy

Sell at 131.50, Target: 130.00, Stop:132.15

New trading strategy

Sell at 131.50, Target: 130.00, Stop:132.15

O.C.O. Buy at 129.20, Target: 131.00, Stop: 128.50

Although the single currency has remained under pressure and the wave (ii) decline from 134.37 should extend weakness towards 129.38 (1.5 times projection of 134.37131.52 measuring from 133.65), reckon 129.04 (1.618 times projection) would contain this wave (ii) and bring strong rebound later in wave (iii).

Our preferred count remains that the wave 2 from 139.26 which unfolded as a complex correction triple threes has ended at 126.95 with 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-131.01, b-135.75 and the c leg as well as entire wave 2 ended at 126.95. As euro jumped again from 127.32, signal the wave ii correction from 134.54 has ended there and break of said resistance would indicate the wave iii from 126.95 has commenced for headway to 136.00.

In view of this, we are trading both sides of the market, sell on recovery for the last leg of wave (ii) or buy on such fall . Only above 132.40 would dampen this near term bearish view and signal correction in (ii) has possibly ended, then gain to 133.00 and possibly 133.65 would follow, break there would confirm.

On the bigger picture, we are treating the rally to 169.97 as end of wave A, then followed by a selloff in wave B (abc-x-abc) at 112.08. The wave C from there should unfolding as an impulse with wave 1 of C ended at 139.26, then the 3-legged wave 2 has ended at 127.00 and wave 3 should bring retest of 139.26, then towards 142.00