Trade Idea: EUR/JPY - Buy At 121.50, O.C.O. Sell At 123.70

EUR/JPY – 122.37

Recent wave: wave 2 has possibly ended at 11966.

Trend: Sideways

Original strategy

Buy at 121.50, Target: 123.80, Stop: 120.80

New trading strategy

Buy at 121.50, Target: 123.80, Stop: 120.80

O.C.O. Sell at 123.70, Target: 121.85, Stop: 124.40

Intra-day fall to 122.17 suggests near term downside bias remains for the fall from 125.36 to extend weakness to 121.84 (61.8% Fibonacci retracement) and possibly towards 121. 45/50, however, as we are keeping our view that wave v has ended at 119.66, downside should be limited to 121.00 and bring another rebound later.

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 although near term downside bias is seen for weakness to 121.80/85 and 121.45/50, reckon 120.90/00 would hold and rebound later. Above 124.50 would bring retest of 125.36 (last week’s high) but break there is needed to retain our bullish count and extend headway towards 127.02 (50% Fibonacci retracement) later

In view of the above analysis, whilst we are still looking to buy euro on further fall, we would also sell on recovery on such a decline. Only break of 120.90/00 would abort and signal the rebound from 119.66 is over and risk 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.