EUR/JPY – 122.49
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 only retreated to 120.02 before finding renewed buying interest again and current rally adds credence to our bullish view that low has been formed at 118.24 and upside bias remains for further gain to 123l00 but break of indicated resistance at 123.31 is needed to signal the entire correction from 124.10 top (2016 high) has ended, bring subsequent rise to 123.73, then retest of 124.10. Looking ahead, once this level is penetrated, this would confirm medium term erratic upmove from 109.49 (2016 low) has resumed for headway to 124.50-60, then 125.25-30 (50% Fibonacci retracement of 141.06-109.49).
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 cannot be ruled out, reckon downside would be limited to 121.60-70 and bring another rise later. Below previous resistance at 121.19 would defer and risk weakness to 120.50 but only break of said support at 120.02 would abort and signal the rebound from 118.24 has ended instead, then further fall to 119.60-70 and 119.30-35 would follow but said support at 118.24 should remain intact.
Recommendation: Buy at 121.70 for 123.70 with stop below 120.70.
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.