EUR/JPY – 133.28
Although the single currency retreated after meeting resistance at 134.38 and further consolidation below recent high at 134.50 would be seen, as euro found renewed buying interest at 132.26 and has staged a rebound, retaining our bullishness and mild upside bias remains for another rebound to 134.00, then towards strong resistance area at 134.38-50. Looking ahead, 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 132.90-00 cannot be ruled out, reckon 132.50-60 would limit downside and bring another rise later to aforesaid upside targets. Only below said support at 132.26 would abort and signal the rebound from 131.17 has ended, bring weakness to support at 131.72, then towards 131.17. 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: Hold long entered at 133.00 for 135.00 with stop below 132.20.
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.