EUR/JPY – 117.70
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.
As the single currency has fallen again after brief recovery and broke below indicated previous support at 118.24, adding credence to our bearish view that the decline from 124.10 top is still in progress and downside bias remains for the erratic decline from 124.10 top to extend further weakness to 117.00 (61.8% Fibonacci retracement of 112.61-124.10) but downside should be limited to 116.00 and price should stay well above 115.00, risk from there is seen for a rebound to take place 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, above 125.00 would add credence to this view.
On the upside, although initial recovery to 118.35-40 cannot be ruled out, reckon upside would be limited to 119.05-10 and price should falter below 119.80-85, bring another decline later. Only a daly close above indicated resistance at 120.44 would defer and suggest low is formed, bring a stronger rebound to 120.90-00 and possibly 121.30-35 but price should falter well below resistance at 121.84, bring another decline later.
Recommendation: Sell euro at 119.75 for 117.15 with stop above 120.75.
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.