Trade Idea: EUR/JPY - Buy At 122.10

EUR/JPY - 123.40

Recent wave: wave 2 has possibly ended at 11966.

Trend: Sideways

New trading strategy

Buy at 122.10, Target: 124.10, Stop: 121.40

Although the stronger-than-expected retreat signals a temporary top has been formed at 125.36 and further consolidation would be seen, reckon downside would be limited to 122.51 (50% Fibonacci retracement of 119.66 to 125.36) and 121.84 (61.8% Fibonacci retracement) would hold, bring another rise later. Above 124.25/30 would suggest correction from 125.36 has possibly ended and bring retest of this resistance, break would revive our bullishness 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 121.45/50 would abort and signal the rebound from 119.66 is over and risk 121.00.

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.