EUR/JPY – 133.92
Although the single currency did fall earlier this month to as low as 131.17 (our short position entered at 133.50 met target at 131.50 with 200 points profit), as euro found renewed buying interest there and has staged a strong rebound, suggesting the correction from 134.50 has ended at 131.17 and retest of this level would be seen, however, break there is needed to confirm medium term upmove has resumed and extend gain to 135.00, and then 135.50-60. Having said that, loss of upward momentum should prevent sharp move beyond 136.00-10 and reckon 136.95-00 would hold, price should falter well below 138.45-50 (1.618 times extension of 109.49-124.10 measuring from 114.85), bring correction later.
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, indicated upside targets at 126.00 and 130.00 had been met and further gain to 135.00 would follow.
On the downside, whilst initial pullback to 133.50-60 cannot be ruled out, reckon 132.90-00 would limit downside and bring another rise later to aforesaid upside targets. Only below support at 131.72 would abort and signal the rebound from 131.17 has ended instead, bring another test of this level. Once this support is penetrated, this would suggest a temporary top is formed, bring retracement of recent rise to previous support at 130.62, then towards 130.00 later.
Recommendation: Short entered at 133.50 met target at 131.50 with 200 points profit and would turn long at 133.00 for 135.00 with stop below 132.00.
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.