Trade Idea: EUR/JPY - Buy At 121.50

EUR/JPY – 122.75

Recent wave: wave 2 has possibly ended at 11966.

Trend: Sideways

Original strategy

Buy at 122.10, Target: 124.10, Stop: 121.40

New trading strategy

Buy at 121.50, Target: 123.80, Stop: 120.80

As the single currency has remained under pressure, suggesting this week's fall from 125.36 may bring stronger retracement of early rise from 119.66 and weakness to 121.84 (61.8% Fibonacci retracement) cannot be ruled out, however, minor support at 121.45/50 should attract renewed buying interest and bring rebound later. Above 123.70/80 would suggest low is possibly formed and bring stronger rebound to 124.25/30, break there would confirm and signal correction from 125.36 has ended and bring retest of this resistance, above would revive our bullish count for further gain to 126.00.

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 120.70 and wave iv at 125.24 and wave v has ended at 119.66 and gain to 124.50 is likely but above 125.36 (Monday high) is needed to confirm and bring headway towards 127.02 (50% Fibonacci retracement)

In view of the above analysis, we prefer to buy euro on further decline. Only break of 120.90/00 would abort and signal the rebound from 119.66 is over and risk 120.70 and 120.30/40.

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 should be limited to 118.40.

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.