EUR/JPY – 108.34

Recent wave: wave v has possibly ended at 107.30

Trend: down

Original strategy  : 

Sold at 108.75 and stopped at 109.45

New strategy   : 

Look to sell higher

Despite intra-day brief rise to 109.56 (our short position entered at 108.75 was stopped at 109.45), as price ran into heavy offers there and has retreated sharply, suggesting consolidation with mild downside bias is seen or weakness to 107.50 (50% Fibonacci retracement of 105.44-109.56), below 106.99-107.01 (previous support and 61.8% Fibonacci retracement) is needed to confirm top has been formed and signal the correction has ended at 109.56, hen further fall to 106.30/35 would follow, otherwise, choppy consolidation would continue.

On the upside, whilst recovery to 108.65/70 cannot be ruled out, only break of said resistance would signal the wave 5 has possibly ended at 105.44 last week and then stronger rebound to 109.82 (50% Fibonacci retracement of 114.19 to 105.44) would follow, break there would confirm, then bring rebound to 110.40/45.

In view of this, we would not chase current retreat here and prefer to wait for subsequent recovery to sell euro again.

Our preferred count is that the decline from 139.26 is wave C and is sub-divided into (a): 127.00, (b) 138.49 and wave (c) has commenced from there with a diagonal wave 1 (i: 126.95, ii: 134.37, iii: 120.70, iv: 125.24 and then wave v at 119.66). The rebound from 119.66 to 127.95 was an a-b-c wave 2 and wave 3 is taking place from 127.95 with minor wave i at 122.37 and wave ii at 125.97 and minor wave iii has ended at 110.49 and wave iv ended at 122.29, wave v ended at 107.30 as the wave 3, wave 4 has ended at 114.74 and wave 5 may extend to 104.45/50.

On the bigger picture, we are treating the rally to 169.97 as end of wave A, then 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 commended from there with minor wave 1 ended at 119.66 and wave 2 at 127.95. This wave (C) of B should be limited to 105.00 and psychological support at 100.00 should remain intact.