EUR/JPY – 120.28
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.
Although the single currency fell briefly to 118.24 late last week, the subsequent rebound suggests low is possibly formed there and consolidation above this level would be seen with mild upside bias for gain to 121.00, however, a daily close above resistance at 121.34 is needed to provide confirmation, bring at least a strong retracement of the fall from 124.10 to 122.00-10. Looking ahead, only a break of resistance at 122.52 would retain bullishness and signal the pullback from 124.10 has ended, bring subsequent test of resistance at 123.31, a firm break above this level would indicate early upmove has resumed for retest of 124.10 (Dec high).
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 119.80 cannot be ruled out, reckon downside would be limited to 119.20-25 and bring another rebound later. Only a drop below said last week’s low at 118.24 would abort and signal the erratic fall from 124.10 top is still in progress for further fall to 117.50-60 but reckon downside would be limited to 117.00 (61.8% Fibonacci retracement of 112.61-124.10) and price should stay well above previous resistance at 116.29, bring another rally later this month or in Q2.
Recommendation: Buy at 119.20 for 121.20 with stop below 118.20.
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.