EUR/JPY – 131.80
New strategy :
Buy at 131.35, Target: 133.35, Stop: 130.75
As euro’s rally has gathered momentum and broke above indicated previous resistance at 131.71, signaling early upmove has resumed and bullishness is for further gain to 132.40-50, then towards 133.00-10, however, near term overbought condition should prevent sharp move beyond 133.50 and upside should be limited to 133.90-00, risk from there is seen for a retreat later.
In view of this, would not chase this rise here and would be prudent to buy euro on pullback as 131.30-35 should limit downside. Below support at 130.91 would abort and suggest top is formed, bring weakness to 130.50-60 but still reckon downside would be limited to 130.25-30 and this week’s low at 129.95 should remain intact.
Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.
Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i – 105.44, wave ii- 123.33, wave iii – 97.03, wave iv – 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).