Trade Idea: EUR/JPY - Buy At 121.50

EUR/JPY - 123.17

Recent wave: wave 2 is unfolding as a triple threes and should be limited to 123.00

Trend: Sideways

Original strategy

Buy at 120.00, Target: 122.00, Stop: 119.30

New trading strategy

Buy at 121.50, Target: 123.50, Stop: 120.80

Although the single currency has moved higher again and test of indicated resistance at 123.33 (Friday's high) is likely, still needs to break this level to signal the wave v of the c leg from 134.37 has possibly ended at 120.70 and bring correction of recent decline towards 124.45 (wave iii trough) and then towards 125.00.

Our latest preferred count is that the 3rd set of a-b-c of larger degree wave 2 is still in progress and only b leg ended at 134.37 (with a - 134.54, b - 127.32 and c - 134.37), hence c leg is now underway with minor wave i ended at 131.52, ii at 133.65, wave iii at 124.45 (instead of 126.55) and wave iv at 126.98 (instead of 128.38) and wave v has either ended at 120.70 or may extend to 120.25/30 (1.236 times projection of 138.49-126.95 measuring from 134.54) and possibly 120.00 before rebound.

In view of this, we are looking to buy euro on pullback or to buy on pullback once said resistance is penetrated. Looking ahead, once resistance at 124.45 (previous support) is broken, this would confirm low is formed, then stronger rebound to 125.90/00 would follow but reckon resistance at 126.98-127.08 would hold from here.

Below support at 120.70 would extend recent decline towards 120.00 but loss of momentum would prevent sharp fall below there and bring correction later this week.

On the daily chart, 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-126.95, b-134.37 and the c leg is still in progress which should be limited to 120.00.

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 should stay well above 120.00 and wave 3 should bring retest of 139.26, then towards 142.00 later this year.