EUR/JPY – 112.46

Recent wave: wave v has possibly ended at 108.06

Trend: down

New strategy   : 

Sell at 113.55, Target: 111.55, Stop: 114.25

Failure to extend yesterday’s rebound and euro met heavy offers at 114.24, the selloff from there signals top has been formed at 114.74 earlier this week and consolidation with mild downside bias is seen for correction to 111.90 (38.2% Fibonacci retracement of 107.30 to 114.74), then 111.50/55, however, reckon 111.02 (50% Fibonacci retracement) would limit downside and key support at 110.02 would hold.

In view of this, we are looking to sell euro on recovery. Only above yesterday’s high at 114.24 would abort and signal the retreat from 114.74 has ended, then retest of this level would follow. Looking ahead, above 114.74 would signal the rise from 107.30 low has resumed and extend gain to 115.00 and possibly to 115.50, however, reckon 116.09 (100% projection of 107.30 to 113.37 measuring from 110.02) would limit upside and 116.56 (61.8% Fibonacci retracement of 122.29 to 107.30) should hold.

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 has possibly ended at 107.30.

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.