EUR/JPY – 131.20
Although the single currency broke above previous resistance at 131.40 earlier this week, lack of follow through buying and current pullback from 131.71 suggest consolidation with initial mild downside bias would be seen and pullback to 130.00-10 cannot be ruled out, however, reckon minor support at 129.66 would limit downside and bring another rise later. Above said resistance at 131.71 would signal the major rise from 109.49 low (2016 low) is still in progress for further gain to 132.00-10, then 132.50-60, however, overbought condition should prevent sharp move beyond 133.10–15 (61.8% projection of 122.40-131.40 measuring from 127.56) and price should falter well below previous chart resistance at 134.59, bring retreat later.
The daily chart is labeled as attached, early selloff from 169.97 (July 2008) to 112.08 is wave (A) of B instead of end of entire wave B and then the rebound from there to 139.26 is wave (B), hence, wave (C) has possibly ended at 94.12 with a diagonal triangle as labeled in the daily chart, hence upside bias is seen for further gain. Recent rally above indicated retracement level at 116.69 (50% Fibonacci retracement of the intermediate fall from 139.26-94.12) adds credence to this view and signal major reversal has commenced but first leg of this wave C has possibly ended at 149.79, hence wave 2 has commenced with wave A ended at 126.09, followed by wave B at 141.06, wave C commenced and could have ended at 109.49, above 126.00 would add credence to this view, then headway to 130.00 would follow.
On the downside, whilst initial pullback to 130.00-10 is likely, reckon downside would be limited to 129.60-70 and bring another rise later. Below previous resistance at 129.18 would suggest top is possibly formed, risk weakness to 128.45-50 but break there is needed to add credence to this view, bring retracement of recent rise to 128.00-10, then towards previous support at 127.56 which is likely to hold from here. In the event euro drops below 127.56, this would signal correction of recent upmove has commenced and bring subsequent fall to 126.45-50 and later towards previous resistance at 125.82 which is likely to remain intact.
Recommendation: Stand aside for this week.
To re-cap the corrective upmove from the record low of 88.93 (18 Oct 2000), the wave A from there is subdivided as: 1:88.93-113.72, 2:99.88 (1 Jun 2001), 3:140.91 (30 May 2003), 4:124.17 (10 Nov 2003) and 5 ended at record high of 169.97 (21 Jul 2008). The brief but sharp selloff to 112.08 is viewed as a-b-c x a-b-c wave (A) of B. The subsequent rebound to 139.26 is (B) of B and (C) of (B) has possibly ended at 94.12 and in any case price should stay well above previous chart support at 88.93, bring rally in larger degree wave C towards 150.00.