EUR/JPY – 123.10
EUR/JPY: Wave v as well as larger degree wave (C) ended at 94.11 and first leg of larger degree wave C upmove has possibly ended at 149.79 and wave 2 correction has possibly ended at 109.49.
The single currency has surged again this week and broke above previous resistance at 123.31, adding credence to our bullish count that correction from 124.10 has ended at 114.85 last month and retest of said resistance is likely, however, break there is needed to confirm early erratic rise from 109.49 low has resumed and extend this move to 124.65, then 125.25-30 (50% Fibonacci retracement of 141.06-109.49) but resistance at 126.47 should hold on initial testing, price should falter below 127.50-60.
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 125.00 would add credence to this view.
On the downside, whilst initial pullback to 122.00-10 cannot be ruled out, reckon downside would be limited to 121.00-10 and bring another rise to aforesaid upside targets. Below support at 120.60 would defer and risk deeper pullback to 120.00 but downside should be limited to 119.40-50 and support at 118.90-95 should remain intact, bring another rise later.
Recommendation: Buy at 121.00 for 124.00 with stop below 120.00.
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.