EUR/JPY - Elliot Wave Count Suggests It May Be Time To Take The Money & Run

Last week I felt 'it could be wise to further protect our position by lowering our stop from 109.90(Update 1) to around 108.20 (locking in roughly 200 pips) , with the Fed and BoJ interest rate decisions due out later in the week'. Sure enough, the Fed decision saw little changed from their March statement and the BoJ underwhelmed yet again (surprise, surprise). After a brief spike in many of the JPY-crosses after the BoJ announcement, EUR/JPY quickly traded back off (within hours) to make fresh lows on the week. Today we witnessed further JPY appreciation as USD/JPY fell below the key 80.10 level highlighted in Thursday's TECH TALK, consequently EUR/JPY too traded lower, taking out the 38.2% retracement around 105.95/00 in the process.

With that said, although the pair has broken lower my primary Elliot Wave count suggests EUR/JPY is in wave-b (grey) of wave-B (black), which implies another correction back higher could be in order (under NO circumstances does this mean I'm turning bullish, just perhaps less bearish) - However, in the immediate short-term while it remains below 106.30 (last Monday/Tuesday lows) an alternative count still remains valid, looking for one final push lower (below the April 16th low) which would likely see a test of the 104.25/35 area - Convergence of the 50% retracement, 100-day sma and bottom of the daily Ichimoku Cloud. Let's also keep in mind that we have plenty of top-tier data out of the EU later in the week (predominately employment and PMI figures as well as the ECB interest rate announcement) which could positively or negatively influence the Euro.

Accordingly, I believe it is prudent to move our stop lower to around 106.40/45*, which is just above the lows cited above, and locks in about 380 pips . Furthermore, I also think it could be wise to raise our second limit from the 102.25/50 area higher to around the 104.25/35* convergence zone as it appears likely to hold on an initial attempt.