EUR/JPY failed to move below 120.75 and instead broke above minor resistance at 121.97 indicating a low. This means that that the decline from 123.18 most likely was the c-leg of an expanded flat correction as wave ii and wave iii could now be developing. We still need a break above the 123.18 peak to confirm that the wave iii is developing but if such break is seen, we should look for a strong impulsive rally in wave iii that ultimately should take us above 127.50.
Support is now seen at 120.92.
R3: 123.75
R2: 123.18
R1: 122.45
Pivot: 121.85
S1: 121.64
S2: 120.92
S3: 120.75
Trading recommendation:
We are long EUR from 121.98 with our stop placed at 120.85.