Long Term Report - EURJPY

MONTHLY CHART

Points to note on the monthly chart:

• Wave (b) of Wave (v) is at 163.96 and we would expect price to retest Wave (b)
• The red cycle is still rising, blue and green are declining while the yellow is rising
• There is a potential support line under RSI
• Price appears to have broken above an intermediate resistance line and suggests the long term picture is higher

To summarize the monthly chart there is not too much information we can take. The basic underlying expectation will be for price to continue rising towards the prior Wave (b) high at 163.96. RSI may be overbought but price remains in an uptrend with both highs and lows moving higher. Although it is not to clear price has been rising above the Pivot Cloud without actually pulling away and therefore there is always a risk that a consolidation around the Cloud is possible.

WEEKLY CHART

Points to note on the weekly chart:

• RSI has retreated from being overbought and at this point is lower than compared to the time at the last price peak suggesting a small bearish divergence
• There is a support line under RSI which should be watched for break to provide information of when a correction has begun
• There is an uptrend in place with both lows and highs still rising
• The cycles are now pointing heavily lower and suggest a next price low in around 5-6 months
• The Elliott Wave structure suggests an extended Wave (iii) within in price is still in Wave (c) of Wave (iii). At this point we have either seen or are about to see the end of Wave -iii- of Wave (c)
• We can note from the Elliott measurements:
• If Wave (iii) = Wave (i) * 223.6% then target is 154.67
• If Wave -iii- = Wave -i- * 176.4% then target is 152.12
• If Wave c of Wave -iii- is equal to Wave a then the target for Wave c is 152.21

The targets above were generated in the September report and recently we have seen a peak at 151.47. From the internal wave count of the Wave v of Wave c of Wave -iii- there is a measurement that suggests that we may have seen the high of Wave -iii- at 151.47. However, we may need to allow for a final spike to 152.12-21. From this area we can see that the cycles imply a downtrend for around 5-6 months. While we need to confirm the peak in Wave -iii- we can generate approximate targets for Wave -iv- which we expect to see at the next weekly cycle low. These will range from an approximate 38.2% retracement at 141.67, a 41.4% retracement at 140.85 and a 50% retracement at 138.65. Given that Wave -ii- was sharp and deep we can expect Wave -iv- to be shallow and move sideways. This probably implies the 140.85-141.67 area as a low for Wave -iv-.

DAILY CHART

Points to note on the daily chart:

• RSI is displaying a strong bearish divergence.
• We can draw a trend line under the Wave b of Wave [v]
• There is a pivot level at the Wave b low of Wave [v] and once a peak is seen this should be the first target
• The larger black cycle is now declining, the blue finding a peak and turning lower while the green and yellow cycles are still rising
• The daily cycles confirm the next black cycle low in around 5-6 months time
• From the Elliott measurements we can derive:
• If Wave -c- = Wave -a- * 138.2% then target is 152.38
• If Wave [v] is a 76.4% projection then target is 151.58
• In Wave [v] if Wave c = Wave a then target is 152.21
• In Wave b of Wave [v] if Wave v = 66.7% then target is 151.99
• In Wave b of Wave [v] if Wave v = 76.4% then target is 152.54
• There is a common target area for Wave [v] around 152.12-152.38
• We have already met the shorter Wave [v] target of 151.58

To summarize the daily chart we feel that we have seen or are about to see the peak in Wave -iii- of Wave (c) with a range of targets between 151.47 and 152.38. We are therefore bearish for the next 5-6 months with the first target at the Wave b of Wave [v] at the 145.00 pivot area. We can expect this to occur in around 30 trading days which is around the end of this year. Following this lower we can expect a pullback before additional losses to the 140.85-141.67 area by around April-May next year.

SUMMARY

In the last report on September 7th I highlighted a target around 152.15 in around 8 weeks - that is around now. Indeed, we have reached 151.47 and while we do need to leave open the chance of a spike higher to the 152.15 area, I have a feeling that we have already seen the end of the current rally.

The underlying analysis suggests that Euro-Yen appears to at the start of a multi-year recovery with the first approximate target at 163.96. While monthly and weekly charts hold no firm chart patterns the uptrend since the 88.69 low in October 2000 is clearly in place with both highs and lows continuing to move higher. There are support lines under both weekly and monthly RSI but both showing no signs of a topping pattern which reflects the nature of the uptrend.

From the weekly Elliott Wave measurements we are seeing projections which fit in broadly with the price eventual price target at 163.96. Within this we have either seen or are close to the end of Wave -iii- of Wave (c) of Wave (iii). At this point both weekly and daily cycles are showing clear signs of beginning a decline that should last until April or May next year.

The daily chart in particular looks very topping and from the current peak we can expect a decline into the end of the year where the daily yellow cycle should find a low and this is anticipated to be at 145.00. From this point we should see a recovery for 1-2 months before the final decline into April-May next year.

I will be following this pattern in daily Pro Commentary to provide updates on the progress.

Global Forex Trading
http://www.gftforex.com

DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.