EUR/JPY – 102.35

Recent wave: wave (i) of 3 ended at 105.44 and wave (ii) has ended at 123.33

Trend: Down

Original strategy :

Bought at 99.60, met target at 101.60

Position: - : Long at 99.60
Target:  - 101.60
Stop:-

New strategy :

Look to buy again lower

Position: - :
Target:  -
Stop:-

Yesterday’s rally has justified our bullishness, our long position entered at 99.60 earlier finally met indicated target at 101.60 (with 200 points profit) and current breach of 102.21 resistance adds credence to our view that low at been formed at 97.04 (wave v bottom) and bullishness remains for this minor c leg of correction to take place for further gain to 102.90-00, however, near term overbought condition should prevent sharp move beyond 103.50-60 and reckon 103.90-00 would hold from here, risk from there has increased for a retreat later.

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 but this wave v should be limited to 96.50-60 and bring wave (iv) correction later. 

As we have taken profit on our long position entered at 99.60, would not chase this move here and we prefer to buy euro again on subsequent pullback. Below intra-day support at 101.68 would bring retreat to 101.00-10, however, previous resistance at 100.85-90 should limit downside and bring another rally later. Only below 100.38 would abort and signal top is possibly formed and risk weakness to 100.00 but break of 99.60 is needed to confirm.

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) ended at 105.44. The wave (ii) correction commenced from 105.44 and has ended a 123.33 as a complex correction ABC-X-ABC, so wave (iii) should extend towards 96.50.

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 extend weakness towards 95.00 before prospect of a strong rebound.