EUR/JPY – 100.81

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

Trend: Down

Original strategy :

Buy at 100.00, Target: 102.00, Stop: 99.35

Position: - :
Target:  -
Stop:-

New strategy :

Buy at 99.60, Target: 101.60, Stop: 98.95

Position: -
Target:  -
Stop:-

As the single currency has retreated after rising to 102.21 last week, retaining our view that a minor top is formed there and consolidation below this level would take place with mild downside bias for retracement to 100.00 and possibly towards 99.60-65, however, renewed buying interest should emerge there, bring another upmove later. A break of said resistance would extend the rise from 97.04 low (wave v bottom) for major correction of recent decline in wave (iv) to 102.50-55 and possibly towards 102.90-00, however, near term overbought condition should prevent sharp move beyond latter level and reckon 103.50-60 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. 

In view of this, we are still looking to buy euro on further fall. Only a breach below support at 98.90 would abort and signal the rise from 97.04 low has ended and risk weakness to 98.05 but reckon 98.00 would hold from here, bring another strong rebound early next month.

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.