Trade Idea: EUR/JPY - Buy At 123.90

EUR/JPY - 124.79

Recent wave: wave 2 is unfolding as a triple threes and should be limited to 118.40

Trend: Sideways

Original strategy

Buy at 123.30, Target: 125.20, Stop: 122.50

New trading strategy

Buy at 123.90, Target: 125.90, Stop: 123.20

As the single currency continued to move higher, suggesting a test of resistance at 125.36 would be seen, however, break there is needed to confirm wave v has ended at 119.66 and the rise from there would extend gain to 126.00, then towards 126.95/00.

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 125.24-28 (previous resistance and 38.2% Fibonacci retracement of 134.37-119.66) is needed to confirm and bring headway towards 127.02 (50% Fibonacci retracement).

In view of the above analysis, we are looking to buy euro on pullback. Below this week's low at 123.24 would prolong consolidation and risk correction to 122.60 (previous minor resistance) which is likely to limit downside and bring another rise later.

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.